Rail plan likely to face $300M cut
Three levels of government won't fork over hoped-for $2.1B
http://www.ottawacitizen.com/news/Rail+plan+likely+face+300M/2373003/story.html
BY NECO COCKBURN, THE OTTAWA CITIZENDECEMBER 23, 2009COMMENTS (1)
The Ontario government's promise to provide $600 million for Ottawa's new light-rail transit system will likely force the city to take a "sharpened pencil" approach to its plans for the major project, some city councillors say.
The city could be dealing with a $300-million shortfall in its $2.1-billion light-rail project, assuming the federal government matches the funding from the province and the city sticks to the typical funding arrangement in which each level of government chips in one third of the cost.
Councillors said Tuesday that the city will need to look into "value engineering" and reconsider the amount of money set aside for the unexpected as the city tries to figure out how the shortfall will affect the project.
"You work through all of those issues to come down to answer that key question: Can you deliver this project at $1.8 billion? I think that that's going to be a good exercise for the city to go through, it's one we have to go through," said Alta Vista Councillor Peter Hume, chairman of the planning and environment committee.
"There are certainly a lot of options for the city to consider. I think we owe it in the first instance to see if we can deliver the program that we've all been talking about, through a sharpened-pencil process."
On Friday, the provincial government pledged $600 million to the light-rail project, which includes a 12.5-kilometre, 13-station route between Tunney's Pasture and Blair stations. A 3.2-kilometre tunnel under the downtown core makes up part of the route. The project is the first phase of a major transit plan that's supposed to last Ottawa until the 2030s.
The city had hoped the federal and provincial government would each provide $700 million for the project. With the federal government possibly matching the province's contribution of $600 million, the city could be forced to trim the project or make up the shortfall itself.
Hume called the provincial funding a "significant achievement" for council and a "friendly challenge" from Premier Dalton McGuinty.
Bay Councillor Alex Cullen, chairman of council's transit committee, said it's too early to tell how the city will deal with the shortfall, but the tunnel set out in current plans can't be shortened or narrowed, "and it would be counterproductive to remove stations."
The plan has a $100-million contingency component -- for cost overruns and unexpected problems -- and the city has the financial capacity to make up the shortfall itself anyway.
"But, obviously, we would want to look at what can be hived off to avoid that," Cullen said.
The city's capital budget in a typical year is between $500 million and $700 million, covering everything from road work to laying new sewers to replacing old buses to fixing community-centre roofs.
Plans need to be analyzed before any changes are considered, Cullen said.
The shortfall is "no small thing, but I don't think it's an obstacle to getting the job done," Cullen said.
Cullen considers the potential shortfall to be $200 million because the city could still pay the $700 million it looked at as its third of the funding, he said.
The project's functional plan was approved by the transit committee this month and goes before council on Jan. 13.
Cullen said he didn't expect decisions about the shortfall to be made at that meeting, but he thinks staff will likely be directed to "sharpen their pencils."
Gloucester-South Nepean Councillor Steve Desroches said he didn't want the city to stretch itself financially to make up any shortfall.
"It sends the wrong message to our federal and provincial partners that if they don't fund us, then we'd be willing to do more on our own," he said. "We are going to have other projects right across the city that we are going to need to continue to support and finance."
Desroches said he was glad the provincial government would help fund the rail project and hoped the federal government matched it, but Desroches said he had concerns that the city's plan did not have enough flexibility to adapt to the available money.
"I think we need to take heed of the premier's comments where we need to tailor the suit to fit the cloth," he said.
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