Contractor will bear cost of LRT delay, city vows
City may withhold payments, and if necessary take RTG to court, mayor says
Ottawa Mayor Jim Watson vowed Wednesday to make it his top priority to protect taxpayers from the growing cost of the LRT delay, threatening to withhold payments and, if necessary, go to court to recoup the city's losses.
Last week the city gave Rideau Transit Group (RTG) a new deadline of Nov. 2 to hand over control of the new $2.1-billion light rail line it's building from Tunney's Pasture to Blair Road.
- LRT running 6 months late
- ANALYSIS | Why did the city let the LRT consortium off the hook for $1M?
- Queen Street businesses frustrated by LRT delay
That's a delay of more than five months from the original May 24 handover, and means the network won't open to passengers until late November at the earliest.
On Wednesday city officials shared a series of documents that reveal more about the financial strain that wait is placing on the city. The documents include memos from various elected officials and senior staff, as well as two letters from RTG dated Nov. 24 and Feb. 5
The city already knew LRT-related detours are costing at least $1.9 million dollars a month, but the memos reveal the city will also incur extra costs to keep buses running, monitor construction sites and cover the general strain on the transit system because of the delay, according to city manager Steve Kanellakos.
The city doesn't expect to have a final tally of the cost of the delay until after the Confederation Line launches.
"It is the city's position that RTG needs to cover our costs," Kanellakos wrote, adding this will likely mean lengthy negotiations and some disputes with RTG.
Watson told reporters Wednesday that he believes the city is in a good position to negotiate with RTG because the city can withhold any number of payments from the contractor if necessary.
When LRT is delivered to the city, RTG will receive a $200M lump sum payment. (That’s the number we’ve heard, but being confirmed in a memo to councillors this morning.) <a href="https://twitter.com/hashtag/ottnews?src=hash&ref_src=twsrc%5Etfw">#ottnews</a>—@jchianello
Dispute will go to court if necessary: mayor
The city is supposed to pay RTG a lump sum of $200 million when the project is complete, but the mayor said some or all of that can be held back if RTG is refusing to cover the city's delay-related expenses. The city can also withhold its monthly $4-million payments to the consortium — a sum that includes maintenance costs — after construction is completed.
Watson said he would be willing to take the contractor to court to recover costs if necessary.
The next monthly update to councillors on the light rail network will come March 6 at the finance and economic development committee.
The city estimates it will cost RTG as much as $8 million to $10 million a month for the ongoing construction costs, which RTG must cover because the company agreed to a fixed price in the contract.