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I suppose it depends on how you define absurd. CPKC has a market capitalization of $102 billion. Congestion has been estimated to cost the Toronto area $44.7 billion in lost GDP each year. If I were CPKC, I would be asking for at least a billion or two just as a relocation fee, on top of whatever it would cost to build a bypass. It does feel kind of absurd to pay a private company like CPKC a couple billion dollars when there's so much else you could spend that money on. If it pays off in higher GDP though, is it really so absurd?Exactly. CPKC won't say no, they will just set the price absurdly high, and make demands that are defensible but hard or costly to meet.
I'm replying to a post about GO 2.0 in the Bloor west subway extension thread:
I suppose it depends on how you define absurd. CPKC has a market capitalization of $102 billion. Congestion has been estimated to cost the Toronto area $44.7 billion in lost GDP each year. If I were CPKC, I would be asking for at least a billion or two just as a relocation fee, on top of whatever it would cost to build a bypass. It does feel kind of absurd to pay a private company like CPKC a couple billion dollars when there's so much else you could spend that money on. If it pays off in higher GDP though, is it really so absurd?
If I were a CPKC shareholder, I'd probably be hoping for a deal to be worked out. CPKC could use the money to pay down its debt or increase its dividend. I mean, you're right that CPKC's demands might exceed the province's budget, but I suspect they'll say yes if the price is right. I'd be more worried about the province's budget and the political will to see GO 2.0 through.
I'm replying to a post about GO 2.0 in the Bloor west subway extension thread:
I suppose it depends on how you define absurd. CPKC has a market capitalization of $102 billion. Congestion has been estimated to cost the Toronto area $44.7 billion in lost GDP each year. If I were CPKC, I would be asking for at least a billion or two just as a relocation fee, on top of whatever it would cost to build a bypass. It does feel kind of absurd to pay a private company like CPKC a couple billion dollars when there's so much else you could spend that money on. If it pays off in higher GDP though, is it really so absurd?
If I were a CPKC shareholder, I'd probably be hoping for a deal to be worked out. CPKC could use the money to pay down its debt or increase its dividend. I mean, you're right that CPKC's demands might exceed the province's budget, but I suspect they'll say yes if the price is right. I'd be more worried about the province's budget and the political will to see GO 2.0 through.
It kind of sounds to me like you're suggesting a kind of nationalization or expropriation. That kind of asset seizure tends to discourage investment, so I doubt either the province or federal government would support it.It's a very grey area, and we all have our own opinions on where "having us over a barrel" becomes unjust enrichment.
If you take that market cap of $102B and divide it by CPKC's route miles, (20,000 per 2023 Annual Report) the market cap for the 16 miles from Bolton to West Toronto is about $82M. At a 7% rate of return, that stretch generates about $6M in profit per year. Very simplistic analysis, I admit.... but it puts some numbers to just what disadvantage CPKC might arguably experience from GO's presence.
The key is that a) CPKC needs to retain unfettered ability to put trains through that territory, both in terms of present volume and its future opportunity and b) GO should not be using CPKC's assets for its own purpose. So the question becomes, how much track and civil works does ML have to construct to stay out of CP's way. That cost, rather than the congestion cost we are avoiding, ought to be the benchmark for price points. I don't disagree with the idea of paying CPKC an "entry fee", but its magnitude should be scaled to that public investment. I could buy a pure "administrative fee" of some amount, say 20% of capital cost of the transit project... but not a fee based on market pricing aligned to "slightly less than the cost of building our own separate line"..
(If it were my government, I would be strengthening the principle that the public interest justifies granting easements to transit to share rail corridors, especially in urban areas. Those corridors have existed for so long that they represent a form of topography, just like the creekbeds that run through our cities. While railways are private entities owned by shareholders, there is still enough of a public franchise to railways to justify a concept of shared use or easement. No different than the easement that the telco's have a long the back of my property).
- Paul
It kind of sounds to me like you're suggesting a kind of nationalization or expropriation. That kind of asset seizure tends to discourage investment, so I doubt either the province or federal government would support it.
But even if you nationalize/expropriate something, my understanding is that you still generally have to pay the owner whatever it is worth. The lowest amount for that I can think of is probably the land value, based on property tax assessments. I don't know what that would be, but I suspect it would be a lot more that $82 million. I guess in theory you could subtract the value of a bypass from the purchase price of the Milton/Midtown line. CPKC would tie the government up in court for years fighting it though.
I'd offer to gift them a bypass, plus a relocation fee. Between the cost of the bypass and building stations, I'd guess that a $2 billion relocation fee probably wouldn't be more than 10 to 20 percent of the project cost.
One person's crook is another person's investment income.I agree though, it’s gonna cost a lot to get these crooks out of the city, but in the long run it’ll be a benefit.
The difference is the backyard is your property - you have title to it. The utility has obtained a right to install its infrastructure there and, when required, access to service or repair it. They probably paid the initial owner of your surveyed plot a one-time amount for that privilege. You are otherwise free to use and enjoy the property that you pretty much as you please.While railways are private entities owned by shareholders, there is still enough of a public franchise to railways to justify a concept of shared use or easement. No different than the easement that the telco's have a long the back of my property).
In the corporate world, there is continuous, if not often convoluted, line of title. According to the registry of federal companies, the Ontario and Quebec Railway Company was amalgamated into the St. Lawrence and Hudson Railway Company Ltd. in 1998, which was amalgamated into the Canadian Pacific Railway Company in 2001, so it would seem CPKC has absorbed all of the assets of the former railway.A small point here......... CPKC does not own the land on which its tracks sit, for the most part. What it possesses, in most cases is a perpetual easement. In the case of this section of track, it would be inherited by way of the Ontario & Quebec railway, whose assets CP leased for 999 years in the late 19thC.
I believe the asset (easement) is now consolidated to CPKC.
Point being, as an asset there is no land, only a legal permission to use that land for the purposes of a railway.
CPKC does own land, generally where its rail yards sit, most of the best development sites were spun off a long time ago to Marathon Realty and those assets were subsequently sold, just like the hotels (Royal York and other now Fairmont properties)
But the value of the asset is really the profit CPKC can derive from it, or derive by selling it to another railway for continued use as same.
As a handy back-of-the-envelope for value, you could use the purchase price of Kansas City Southern by CP (31B) divided by the latter's trackage 11,747 and you would derive a value of ~2.3M per km; * this being mainline track the value would be higher than the average in the calculation.
If CP didn't own the land, who would? The original company no longer exists.
So are you arguing that it is Crown Land?The Government of Canada.
That is the case for most railway ROW's, they were granted as perpetual easements, not title.
If we're talking about land, then why not have the government negotiate some kind of "land swap" deal with CPKC?
CPKC gives the government the midtown line, Agincourt yard & Lambton yard. The government in return gives CPKC an equal amount of crown land to construct a freight bypass and a new yard outside the city. Perhaps a bypass running alongside the proposed 413 highway?
Equal volume or equal value? If value, how calculated? The economic value to both the city/province and the company or simply the land value?If we're talking about land, then why not have the government negotiate some kind of "land swap" deal with CPKC?
CPKC gives the government the midtown line, Agincourt yard & Lambton yard. The government in return gives CPKC an equal amount of crown land to construct a freight bypass and a new yard outside the city. Perhaps a bypass running alongside the proposed 413 highway?
So are you arguing that it is Crown Land?
We would have to get into the archival legislation to see what the terms of the original charter were.
Also, and I realize railways often treated differently in ways unknown to me, railways pay property taxes, and easements are not normally taxable, the tax is paid by the landowner.
It's a conundrum.
If we're talking about land, then why not have the government negotiate some kind of "land swap" deal with CPKC?
CPKC gives the government the midtown line, Agincourt yard & Lambton yard. The government in return gives CPKC an equal amount of crown land to construct a freight bypass and a new yard outside the city. Perhaps a bypass running alongside the proposed 413 highway?
