KEY CHARACTERISTICS AND ASSUMPTIONS OF THE INVESTMENT STRATEGY
Each RTP project should be implemented using a procurement model that maximizes the ability
of Metrolinx to implement projects quickly, ensure value for money, and limit exposure to project
risks. It is assumed that in each case, private sector involvement in project design, construction,
and financing will be considered, where appropriate. According to Province of Ontario and
federal government requirements, all large transit capital project proposals must be submitted for
Alternative Financing and Procurement (AFP) evaluation.
Investments should be affordable and a Financial Plan should be in place to demonstrate how the
investments will be funded. Since the investments in the transportation system will generate
benefits for the GTHA residents over many years, the use of debt financing is appropriate and the
debt should be amortized over the useful life of the assets, similar to a home mortgage.
The current Financial Plan is focused on the capital expansion costs of the RTP. Options for longterm
sustainable funding of transit operating and rehabilitation costs, and the remainder of the
RTP capital expansion requirements, will be addressed in the Metrolinx report back to the Ontario
government by 2013.
The province is currently considering asset title options for new rapid transit infrastructure. For
the purposes of developing the Investment Strategy, all new rapid transit capital assets were
assumed to be under the title of the Province of
Ontario or Metrolinx, as the primary capital
funding source. Capital costs were assumed to
be amortized over the life of the assets similar to
a homeowner’s mortgage (e.g., over 15, 25, or
even 40 years depending on the type of asset).
This also reflects the benefits that accrue to
future generations that would gain from the
continuing use of these assets.
Debt service payments are assumed to
commence as debt is issued to pay for capital
costs. However, arrangements for construction
period financing could be considered at the
individual project decision-making level, based
on the selected procurement and delivery model.
Capital assets should be maintained over their
life-cycle using internationally-recognized sound
asset management principles. This means that
assets should be maintained to an agreed
standard through continuous investments in
asset rehabilitation. Rehabilitation expenditures
are assumed to commence five years after