City to pay $49 million for cancelling LRTs

Mayor’s decision to axe Sheppard, Finch LRTs will cost
City agreed to reimburse Metrolinx for cash spent already
Kris Scheuer
(Written for Town Crier April 1.)

All aboard: Mayor Rob Ford gives the thumbs up with Premier Dalton McGuinty before making a joint transit announcement March 31. Photo by Francis Crescia/Town Crier.

The city taxpayers are on the hook for at least $49 million now that the Ontario government and Metrolinx agreed to cancel two previously approved light rapid transit lines for Sheppard and Finch.
Early in his term Mayor Rob Ford announced the Transit City plan for four surface LRT lines on Sheppard, Finch, Eglinton and in Scarborough was dead. His office spent four months negotiating with the province and Metrolinx to spend the allotted $8.4 billion on making the Eglinton LRT underground and converting the Scarborough RT to a surface LRT.
He also sought permission for the city to look for $4.2 billion in private sector funding for a new Sheppard subway.
That deal, announced March 31, included a provision that the city pay Metrolinx back for any costs associated with canceling the previously approved projects. The bill to the city will be at least $49 million, Metrolinx confirmed to the Town Crier on April 1.
“At this time we estimate there are $49 million in sunk costs mostly for work on the environmental assessments, designs or engineering and project management for Finch LRT and Sheppard LRT,” said Metrolinx spokesperson Vanessa Thomas. “The $49 million (is) for costs we already accrued.

Mayor Rob Ford announced he will seek $4.2 billion in private sector cash to build a new Sheppard subway line. Photo by Francis Crescia/Town Crier.

“The next step is to negotiate the terms of how those costs will be paid back,” she said.

Metrolinx officials will be speaking to various suppliers associated with Transit City including Bombardier regarding reducing the number of  light rail vehicles that have been ordered.
“Metrolinx entered into agreements for about 180 light rail vehicles from Bombardier for four light rail lines the former mayor described as Transit City for Finch, Sheppard, Scarborough RT and Eglinton,” she said.
“Now that Sheppard and Finch will no longer be LRTs, the discussion has to be had with suppliers.”

She mentioned that the vehicles are still in the design phase.
St. Paul’s councillor Joe Mihevc, a proponent of the old Transit City plan, said the city could be on the hook for as much as $100 million due to canceling the Sheppard and Finch LRTs.
The $49 million is bottom floor,” said Mihevc, a former vice chair of the TTC. “That is the absolute minimum that was an end of September 2010 cost. They continued to work for four months. We signed consultant contracts that were $500 million. Not all will be affected. I think the figure will be closer to $100 million (in lost costs).”
While the mayor’s office negotiated the new deal it still needs approval from city council. It will likely come to council this summer when the mayor’s office has a financial plan to present on how to pay for the Sheppard subway, said Mihevc.
“There is no business sense behind this to throw between $49–100 million down the drain,” he said. “This is the biggest ideological gravy train to hit the city since amalgamation.”
Mihevc also said if the mayor gets the private sector to invest $4.2 billion to construct a Sheppard subway it will take the city decades to pay them back from future property taxes associated with new development along that corridor.
“We will be indebted for a Sheppard subway line that will carry less people than a Sheppard LRT that was going further east and a Finch LRT,” Mihevc said.
Ford told the media at Thursday’s transit announcement the city will study the details on how to pay for his $4.2 billion Sheppard subway plan.
“I know all of you ask for the numbers just like every taxpayer will and deserve to know. Those numbers will be finalized during the detailed study. However we expect Sheppard subway project to cost approximately $4 billion,” Ford said.
“We expect to receive some money from the province after they confirm costs on the Eglinton and Scarborough Crosstown line. And we will continue talking to the federal government after the election about their $333 million commitment for a Sheppard subway. The remainder of the cost will be paid by the private sector.”
“Once the TTC approves that report we will take it to council at the appropriate time.”

4 responses to “City to pay $49 million for cancelling LRTs

  1. I’m against any idea that would make the TTC funded by private funds. Seems like a step in the direction of privitizing the TTC. Smells like the 407 to me. Who are these investors and is this just another way to pad our Mayors friends pockets. If it can’t be funded with public funds then the plan should be phased in over time and not funded by profit seeking investors.

    • Jerry,
      the city doesn’t know who the private investors would be yet. By the mayor has said the new Sheppard subway would be owned and operated by the city. So the private investment of $4 billion to construct the subway would have to be paid back to the developers somehow. The city will develop a business plan in the next few months that city council will then vote on.

  2. Instead of taking away traffic lanes for surface LRTs making more congestions on roads underground LRTs or above ground sky trains frees up traffic.
    People have more choice and bike lanes can be more easily introduced.
    I am really surprised with Joe Mihevc councillor of St Paul why is he so against the better way?

    • Tibor,
      not sure where you got the impression Joe Mihevc was against the better way (aka TTC)…
      He is advocating that the old plan approved by the province that had four LRT lines while the new plan the mayor asked the province for has two LRTs (one longer below ground one and plus one surface route). And Joe’s other objection is he says Mayor Rob Ford’s plan will cost more, relies on the private sector to pay $4 billion to build a new Sheppard subway which the city would have to find a way to pay the investors back for in the future. So in the articles I wrote, Joe has told me Ford’s plan is more costly, will take longer to build and will serve fewer riders (for example he states the Sheppard subway line is shorter than the previously approved less costly Sheppard LRT).

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