Ottawa will not be getting a new north-south light rail line anytime soon, city council has decided.

Council voted 13-11 Thursday afternoon in favour of scrapping both the original $778-million light rail contract approved by the previous council in July and the shortened, slightly cheaper light rail plan passed last week.

The decision — made less than two hours before a crucial 5 p.m. contract deadline — means the city forgoes for now $400 million in federal and provincial funding promised for the original plan.

City lawyers have estimated that the decision could also cost the city between $250 million and $300 million in claims from Siemens-PCL/Dufferin, the group of companies contracted to design, build and maintain the rail line through an agreement worth $778.2-million. The city has already spent $65 million on the project.

Council's decision was between three choices:

• The original plan, which ran north from Barrhaven and east through downtown to the University of Ottawa and was approved by the previous council in July.
• The shortened plan, which ran north from Barrhaven, but stopped at LeBreton Flats, west of downtown, and was expected to cost about $70 million less.
• Neither plan.

Earlier in the day, it was revealed that council had only until 5 p.m. ET Thursday to make its crucial decision — not until the start of Dec. 15 as previously thought.

A letter arrived Thursday confirming Ontario would hand over $200 million for the City of Ottawa's light rail transit line if council voted in favour of the original plan.

And Siemens-PCL/Dufferin sent a letter late Wednesday threatening legal action against the city if both plans fell through.

Neither letter swayed council into voting in favour of either existing light rail plan.

Council concluded the vote more than an hour before the deadline.

A vote on the project was being held because the provincial and federal governments said they could not review the revised light rail plan approved by council last week — and confirm $400 million in funding — before the project's contract deadline.

Senior governments wanted review

The two higher governments committed $200 million each to the original proposal, but said the revised proposal was different enough to warrant another complete review.

A day before the province sent the letter confirming its commitment to the old plan, Ontario Premier Dalton McGuinty gave his view about changes to the proposal.

"They're trying to change something on the fly which doesn't readily lend itself to fast changes," he said, adding that the original proposal came out of two years of discussions among three levels of government.

He added that he did not personally favour the revised plan.

"It seems … just to me as a lay person, that making sure our new light rail system moves through the downtown would be important."