Trillium Line shutdown, financial risks on councillors' minds ahead of multibillion-dollar LRT decision
Jon Willing, Ottawa Citizen
Updated: February 27, 2019
City councillors raised questions about the city’s financial risks, a planned two-year shutdown of the Trillium Line and the quick turnaround of approving $4.6-billion in government spending as they scrutinized the Stage 2 rail construction package Wednesday.
The special council meeting on Stage 2 was reserved for public delegates and councillor questions. Council will vote on the Stage 2 contracts next Wednesday.
The Stage 2 project would extend the Confederation Line LRT west from Tunney’s Pasture to Algonquin College and Moodie Drive, and east from Blair Station to Trim Road. The Trillium Line would be extended to a new Limebank Station in Riverside South, with a separate rail link between South Keys Station and the Ottawa International Airport, including a stop at the EY Centre.
SNC-Lavalin, under the name TransitNEXT, is proposed to receive the Trillium Line expansion and maintenance contract, while Kiewit and Vinci, under the name East-West Connectors, are proposed to receive the Confederation Line expansion contract.
The Rideau Transit Group, which is building Stage 1 LRT, will handle the maintenance for the entire Confederation Line through 2048.
The Stage 2 package has a price tag of $4.657 billion. The city’s estimate from March 2017, before asking for bids, was $3.415 billion. The city says its decision to broaden the scope of the project, plus $591 million in increased market prices for the work, are the difference-makers in the major cost change.
The federal and provincial governments are providing grants totalling nearly $2.4 billion.
Eighteen people signed up to speak to council about Stage 2. There wasn’t a lot of criticism, but there was some apprehension.
A company expressed concerns about the city raising Limebank Road over the future rail line in Riverside South, impacting the company’s land at Earl Armstrong Road. A resident questioned the city’s recommended selection of SNC-Lavalin for the Trillium Line work, considering the controversy involving the company at the federal level. A transit user thought there was no good reason to run a train to the airport. An architect criticized the public-private partnership approach to LRT procurement.
On the other hand, officials from post-secondary institutions, business groups and the Ottawa International Airport lined up to say how great Stage 2 will be.
The Federation of Citizens’ Associations supports transit expansion, but warned the city not to raise fares too much, threatening the success of LRT.
Before the meeting, Mayor Jim Watson emphasized to reporters that the city isn’t blowing the budget on Stage 2, since council hasn’t set the project budget.
“Most people that I have talked to understand that when estimates come in a hot construction market, there are going to be adjustments normally upwards,” Watson said, adding that the city has also added millions of dollars to the scope of the project for the long-term efficiency of the municipal rail system.
“This is the time to do it right and to not go and start cutting corners that would only cost us a lot more in the years ahead and make it much more disruptive.”
On whether the city can afford more than $4.6 billion, considering the payment scenario hinges on more-than-expected borrowing and a promise by the former provincial Liberal government to double the gas tax transfer, Watson said he trusts the city treasurer’s analysis that the project is affordable for the City of Ottawa.
City treasurer Marian Simulik said only the revenue streams out of the city’s control should be considered a financial risk for the transit project.
As an example, she pointed to the promised gas tax increase, a key source of LRT funding for city hall. The current Progressive Conservative government hasn’t indicated it would limit the gas tax transfer, but it would be out of the city’s hands.
Still, the city doesn’t think the PCs would scrub the Liberal gas-tax pledge because it would hurt the City of Toronto, and as Simulik told Coun. Diane Deans, “what’s good for Toronto is good for the rest of the province.”
Also, the city doesn’t have total control over development growth, which creates development charge revenue for the transit project.
“You have control over most of the levers that are in the plan in terms of funding,” Simulik said.
The city’s planned borrowing, which will be $700 million more than previously projected for transit projects over 30 years, won’t impact other city projects requiring borrowed money, she said.
The city says its 30-year transit financial plan is affordable as long as interest rates don’t rise above 4.75 per cent. Stage 2 would have the city borrow $1.6 billion. (The city currently borrows money at around 3.5 per cent).
One of the big surprises for councillors has been the proposed Trillium Line shutdown.
To allow the expansion on the Trillium Line, the city will close the tracks between May 2020 and a date in the second half of 2022. A parallel bus service will be in place.
Coun. Shawn Menard said he’s receiving feedback from the public about the lengthy shutdown, and although the city’s director of rail planning said TransitNEXT is open to dialogue, the company has factored the shutdown into its final price.
Some councillors have been worried about having only 13 days to digest large reports and consider staff recommendations on what will be the largest infrastructure project by the City of Ottawa.
Delaying a Stage 2 contract decision will only increase the construction costs, Watson said.
jwilling@postmedia.com
twitter.com/JonathanWilling
https://ottawacitizen.com/news/local...r-lrt-decision