Budget's transit fund a positive sign for Ottawa’s Phase 2 LRT
Joanne Chianello, Ottawa Citizen
Published on: April 21, 2015, Last Updated: April 21, 2015 7:58 PM EDT
The 2015 federal budget offers the most optimistic sign yet that the Conservative government will pony up its one-third of the $3-billion second phase of Ottawa’s light-rail project.
The new Public Transit Fund will — eventually — make good on demands by cities and the Federation of Canadian Municipalities for the federal government to invest $1 billion a year on urban transit. The fund gets off to a slow start, by only providing a total of $750 million until 2019, but permanently commits $1 billion annually thereafter.
This is essentially good news for the City of Ottawa, which has signalled that it’s looking to share the costs of Phase 2 with the other two levels of government. The provincial Liberals have publicly committed their billion-dollar share, but the federal Conservatives have been all but silent in the face of Mayor Jim Watson’s demands to know if the feds are on board.
However, Watson agreed that Tuesday’s budget announcement is cause for cautious optimism.
“I’m pleased to see significant transit funding identified in today’s budget,” the mayor told reporters, crediting the investment on the FCM’s and big city mayors’ lobbying efforts over the last several years.
The city will officially apply for Phase 2 funding this summer, said Watson, to make it clear what Ottawa is looking for in terms of provincial and federal investments.
And there are a few reasons to believe that this new fund may work to Ottawa’s advantage.
First, the fund will favour projects that are financially structured as public-private partnerships, or P3s. The budget document describes the City of Edmonton’s decision to employ “a public-private partnership to design, build, finance, operate and maintain a 13.2-kilometre new light rail transit line over a 30-year contract” as innovative.
Sound familiar? Phase 1 of Ottawa’s LRT, which is currently under construction, almost exactly matches the Edmonton example glowingly referred to in the budget. There are certainly some cities in Canada that don’t want to go the P3 route – critics argue that taxpayers pay too much over time for the protection offered by private partners – but Ottawa is already a P3 proponent.
Although the details of the fund’s program parameters won’t be announced until later this year, there’s no reason to believe that Phase 2 won’t meet the requirements.
Secondly, the budget calls for eking out the funds over 20 or 30 years instead of paying in a few lump sums upfront. That could be cause for some concern. Would payments spread out over decades cause the city to have to borrow more upfront than planned? Would the investment decrease in value over the years due to inflation, or would the funds be indexed? It’s too early to know.
But the government’s plan to draw out payments over time could help Ottawa. Had the government announced a more traditional 10-year, $10-billion investment fund, what are the chances Ottawa would secure $1 billion, or 10 per cent of the total pool of money? Likely quite low.
The government argues in the budget document that paying out over a long period of time “allows more federal funding to be available to support more public transit projects.” That gives Ottawa, where construction for Phase 2 is scheduled to start in 2018, a better shot at having its full request funded.
Which brings us to our third reason for optimism: politics. With a federal election looming this fall, the Conservatives surely don’t want to leave all the promises of infrastructure spending to their opponents. Ontario’s provincial election last year showed the dangers of that strategy. PC leader Tim Hudak said he wouldn’t fund a number of planned light-rail projects — including Ottawa’s Phase 2 — and he paid the price at the polls. If Conservatives are looking to pick up support in urban areas, then they need to support transit, too.
Securing $1 billion in federal light-rail investment for Ottawa is not a done deal, of course. Watson pointed out that the federal government will often only fund 25 per cent of P3 projects instead of one third, which would be an issue for municipal taxpayers. There’s also the question of which cities are allowed to apply for the funding. Some city leaders, including Watson, were expecting the transit fund to be aimed at big cities. That may still be the case. But if the $1 billion per year is to be shared among all Canadian municipalities’ transit systems, then it won’t be nearly enough.
Still, following months of quasi-silence from the Conservative government on Phase 2 LRT funding, the new Public Transit Fund is the most positive indication so far that Ottawa’s pleas for cash might not fall on deaf ears.
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What’s in the federal budget for Ottawa
Public Transit Fund: Ottawa will be able to apply for Phase 2 light-rail money under this new fund, which will provide $750 million until 2019, then $1 billion annually on a permanent basis. The government will favour public-private partnerships, and make payments over 20 or 30 years.
New Building Canada Plan: Ottawa will be able to apply to the infrastructure fund, which will provide $5.3 billion over the next 10 years. However, Ottawa’s major non-transit infrastructure ask — funding the Ottawa River Action Plan — has already been approved.
Support for Ottawa Police: The government has renewed its $2-million annual subsidy to the Ottawa Police Services in recognition of the additional costs the local force undertakes to police national landmarks, institutions and events.
Sesquicentennial money: There’s not a lot that’s capital-specific mentioned in the proposed funding for Canada’s 150th anniversary celebrations, but the budget includes $210 million over four years to support activities across the country, including “enhanced Canada Day celebrations in the National Capital Region and other major Canadian cities.” The government is also proposing to create a new dedicated infrastructure fund to cost-share with provincial and municipal governments projects that “celebrate our shared heritage, create jobs and improve the quality of life of Canadians.” Details of the program are to be announced later this year.
Cash for Atomic Energy of Canada Ltd: The budget promises up to $72.3 million for AECL this year to, among other things, “maintain safe and reliable operations at the Chalk River laboratories.”
Affordable Housing: The government is extending funding to affordable housing projects both on and off reserves to the tune of $2.3 billion per year. And starting next year, $150 million over four years will be earmarked to help social-housing providers renew their mortgages at lower interest rates.
http://ottawacitizen.com/news/politics/c...-a-positive-sign-for-ottawas-phase-2-lrt
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