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 project completion.

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