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City vs. province: Who can build transit faster?

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But while the argument could sound persuasive to the thousands of Toronto commuters who spend their mornings packed into overcrowded trains, whether the controversial subway upload would actually result in the rapid delivery of transit projects is far from clear.

Although there’s no question the province can exert greater financial muscle than the municipal government to pay for big infrastructure projects, experts say uploading the subway to the Ontario government is no guarantee projects will be delivered sooner.

And while city council debates can appear messy at times, critics of the Conservatives’ proposal say the provincial government has shown it’s just as adept at delaying or even cancelling vital Toronto transit projects.

“There are very few restraints on a motivated provincial government,” said Siemiatycki, who is researching the factors that determine how fast transit gets built.

“If the provincial government wants to go quickly and if they have the money available or they’re willing to borrow, at least constitutionally their powers (allow them to build transit fast),” he said.

The province has more tools to raise revenue, including income and sales taxes, and unlike the city, the provincial government can run deficits, giving it more flexibility to borrow and fund big projects.

The city’s revenue raising powers are mostly restricted to the property tax base, and by law it can’t run a deficit. The city also has a council-imposed debt limit that says it can’t spend more than 15 per cent of its property tax levy servicing debt, which further restricts how much it can borrow.

While the current arrangement allows the province to give grants to the city to fund new lines, the Conservatives argue that if Ontario had the subway on its books as an asset, it could amortize the cost of projects over time, freeing up larger investments.

But Siemiatycki notes the Ford Conservatives have made reducing the debt a top priority, which makes it unlikely his government is going to leverage the province’s greater borrowing ability to build transit. If so, it will have to find the money elsewhere.

The province’s three priority subway projects — the Relief Line, the Yonge North Extension, and the Scarborough subway extension — would cost at least $16 billion, an amount that would likely be split by all three levels of government.

Yurek has proposed reducing the direct cost to taxpayers by enlisting the private sector, which he contends would help fund new lines in exchange for development rights above or near stations.

Experts have expressed grave doubts the market-driven scheme could generate enough funding to cover the huge costs new lines, however.

And while the minister has argued that securing funding from developers could let the government start projects sooner, Siemiatycki argued the type of alternative funding model the Conservatives are contemplating could slow down the completion of transit.

Implementing financing arrangements with developers and changing zoning rules to allow for the increased density at station sites would be complex and take time, he argued.

“The more that you look for these alternative funding approaches, and the more a government tries to walk that line of investing in transit without really having to dig into the provincial coffers and borrow the money to invest in it,” the greater risk of delays, Siemiatycki said.

The province’s other main argument for the upload is what it describes as city hall’s indecisiveness on transit, a reputation Toronto representatives have been saddled with at least since a series of high-profile votes when Premier Ford was a councillor and his brother was mayor.

After Rob Ford declared the planned Transit City light rail network dead in 2010, council voted to resurrect the lines in 2012, only to change course a year later and replace one of them with a subway to Scarborough Town Centre.

Councillor Gord Perks, a vocal critic of the Fords when they were at city hall, argued the premier is in no place to blame council for holding up transit projects.

“The only time I have ever seen council reverse policy on a transit project was when Rob and Doug Ford stopped Transit City and therefore stopped transit expansion in the city of Toronto,” Perks said.

He noted that in 1995, during the last time Conservatives held power at Queen’s Park, the party cancelled a four-stop subway on Eglinton that was already under construction.

“The history of Conservatives and transit in Ontario is filling in the hole of a subway that was under construction,” he said.

Perks argued that if the province wants to use its financial power to speed up projects, it could merely increase the funding it provides to the city.

During their 15 years in power the Ontario Liberals also had trouble keeping provincially-owned projects on time and on budget. In 2012 when Metrolinx, the provincial transit agency, signed a deal to build the $1.2-billion Finch West LRT, it was supposed to open by 2020. It’s now expected in 2023.

The $5.3-billion Eglinton Crosstown was also supposed to open by 2020, but now is scheduled for 2021, although the consortium building the line took Metrolinx to court last year seeking an extension to the deadline. Metrolinx agreed to pay $237 million to keep the project on schedule.

Murtaza Haider, an associate professor at the Ted Rogers School of Management at Ryerson University, contends neither level of government has a perfect record when it comes to following through with transit plans.

“It’s a crisis of trust regardless of who you look at, the city or the province,” Haider said.

“But the province has the advantage in that they have the ability to raise debt, they have the much larger tax base, and they have the experience of building large infrastructure projects,” he said.

“If you want to force me to reach a conclusion, it is that. (The province) is the lesser of the two evils.”

City vs. Provincial Transit Projects: Who builds it faster?

Finch and Sheppard LRTs

Owned by: Province

Status: Delayed by years.

What happened?: The province agreed to fund the lines as part of the Transit City plan and in 2009 said both would open in 2013. Rob Ford declared Transit City dead in 2010, only to see council resurrect the LRTs in 2012. The province now says Finch will open by 2023, and there is no completion date for Sheppard.

Toronto York Spadina Subway Extension

Owned by: City

Status: Delayed two years and $1.7 billion in increased costs

What happened?: Originally the TTC planned to extend Line 1 to York University, but the province pushed them to bring it all the way to Vaughan. The longer extension plus the death of a worker and disputes with contractors pushed the budget from $1.5 billion to $3.2 billion, and delayed the opening date from 2015 to 2017.

Eglinton Crosstown

Owned by: Province

Status: Scheduled to open 2021, one year late

What happened?: Initially slated to enter service in 2020, the province pushed that back to mitigate construction disruption. Last year the consortium building the $5.3-billion line took Metrolinx to court seeking more time. Metrolinx agreed to pay $237 million to keep it on schedule.

Scarborough subway extension

Owned by: City

Status: Scheduled to open 2026 at earliest

What happened?: Council resurrected the line in 2013 after Rob Ford killed the Transit City light rail plan. As projected costs soared, council voted in 2016 to remove two stations from the three-stop plan. The provincial Conservatives have said they want to take over the $3.35-billion project and add back two stops funded by the private sector, which would likely delay its completion.

Ben Spurr is a Toronto-based reporter covering transportation. Reach him by email at bspurr@thestar.ca or follow him on Twitter: @BenSpurr

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‘Business as usual’ for Dorel Industries after terminating go-private deal

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MONTREAL — Dorel Industries Inc. says it will continue to pursue its business strategy going forward after terminating an agreement to go private after discussions with shareholders.

« Moving ahead. Business as usual, » a spokesman for the company said in an email on Monday.

A group led by Cerberus Capital Management had previously agreed to buy outstanding shares of Dorel for $16 apiece, except for shares owned by the family that controls the company’s multiple-voting shares.

But Dorel chief executive Martin Schwartz said the Montreal-based maker of car seats, strollers, bicycles and home furniture pulled the plug on a deal on the eve of Tuesday’s special meeting after reviewing votes from shareholders.

“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity, » he said in a news release.

Dorel’s board of directors, with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recused, unanimously approved the deal’s termination upon the recommendation of a special committee.

The transaction required approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.

Schwartz said enhancing shareholder value remains a top priority while it stays focused on growing its brands, which include Schwinn and Mongoose bikes, Safety 1st-brand car seats and DHP Furniture.

Dorel said the move to end the go-private deal was mutual, despite the funds’ increased purchase price offer earlier this year.

It said there is no break fee applicable in this case.

Montreal-based investment firm Letko, Brosseau & Associates Inc. and San Diego’s Brandes Investment Partners LP, which together control more than 19 per cent of Dorel’s outstanding class B subordinate shares voiced their opposition to the amended offer, which was increased from the initial Nov. 2 offer of $14.50 per share.

« We believe that several minority shareholders shared our opinion, » said Letko vice-president Stephane Lebrun, during a phone interview.

« We are confident of the long-term potential of the company and we have confidence in the managers in place.”

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Pandemic funds helping Montreal businesses build for a better tomorrow

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Many entrepreneurs have had to tap into government loans during the pandemic, at first just to survive, but now some are using the money to better prepare their businesses for the post-COVID future.

One of those businesses is Del Friscos, a popular family restaurant in Dollard-des-Ormeaux that, like many Montreal-area restaurants, has had to adapt from a sit-down establishment to one that takes orders online for takeout or delivery.

“It was hard going from totally in-house seating,” said Del Friscos co-owner Terry Konstas. “We didn’t have an in-house delivery system, which we quickly added. There were so many of our employees that were laid off that wanted to work so we adapted to a delivery system and added platforms like Uber and DoorDash.”

Helping them through the transition were emergency grants and low-interest loans from the federal and provincial governments, some of which are directly administered by PME MTL, a non-profit business-development organization established to assist the island’s small and medium-sized businesses.

Konstas said he had never even heard of PME MTL until a customer told him about them and when he got in touch, he discovered there were many government programs available to help his business get through the downturn and build for the future. “They’ve been very helpful right from day one,” said Konstas.

“We used some of the funds to catch up on our suppliers and our rents, the part that wasn’t covered from the federal side, and we used some of it for our new virtual concepts,” he said, referring to a virtual kitchen model which the restaurant has since adopted.

The virtual kitchen lets them create completely different menu items from the casual American Italian dishes that Del Friscos is known for and market them under different restaurant brand names. Under the Prasinó Soup & Salad banner, they sell healthy Greek options and their Stallone’s Sub Shop brand offers hearty sandwiches, yet the food from both is created in the same Del Friscos kitchen.

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Downtown Montreal office, retail vacancies continue to rise

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Some of downtown Montreal’s key economic indicators are heading in the wrong direction.

Office and retail vacancies in the city’s central core continued to climb in the fourth quarter of 2020, according to a quarterly report released Thursday by the Urban Development Institute of Quebec and the Montréal Centre-Ville merchants association. The report, whose first edition was published in October, aims to paint a socio-economic picture of the downtown area.

The survey also found office space available for sublet had increased during the fourth quarter, which may foreshadow even more vacancies when leases expire. On the residential front, condo sales fell as new listings soared — a sign that the downtown area may be losing some of its appeal to homeowners.

“It’s impossible not to be preoccupied by the rapid increase in office vacancies,” Jean-Marc Fournier, the former Quebec politician who now heads the UDI, said Thursday in an interview.

Still, with COVID-19 vaccinations set to accelerate in the coming months, “the economic picture is bound to improve,” he said. “People will start returning downtown. It’s much too early to say the office market is going to disappear.”

Public health measures implemented since the start of the pandemic almost a year ago — such as caps on office capacity — have deprived downtown Montreal of more than 500,000 workers and students. A mere 4,163 university and CEGEP students attended in-person classes in the second quarter, the most recent period for which figures are available. Border closures and travel restrictions have also brought tourism to a standstill, hurting hotels and thousands of local businesses.

Seventy per cent of downtown workers carried out their professional activities at home more than three days a week during the fourth quarter, the report said, citing an online survey of 1,000 Montreal-area residents conducted last month.

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