The first section of Ottawa's new rapid transit line will cost hundreds of millions more than previously estimated.

Light rail between Blair Road and Tunney's Pasture, including a three-kilometre downtown tunnel, will cost $2.1 billion, city staff estimated Friday. That's $400 million more than their December 2008 estimate and $300 million more than the estimate in the city's recent funding request to the federal and provincial governments.

Nevertheless, staff calculated the city can shoulder its one-third share of the cost. The provincial and federal governments are expected to split the remaining two-thirds.

"I think we're well-prepared to go and have a really good discussion with the province and the feds," said Nancy Schepers, deputy city manager of infrastructure services, after presenting the numbers to city council. "We have a very, very sound plan."

City staff said they consulted with experienced firms involved in transportation and tunnelling projects to come up with their latest cost estimate, and had it reviewed by a "major" international engineering and project management firm.

Alex Cullen, chair of the city's transit committee and councillor for Bay ward, acknowledged the transit plan is a big investment. But he noted, "What we've heard today is that this a project the city can afford."

Election issue

Cullen said the plan is one that will transform the city by reducing downtown congestion and save money that would otherwise be spent on 1,000 new buses.

"I think we have to do it," he added. "We need this tunnel today, as a matter of fact."

When asked if he thought the the transit plan will be a big issue in the 2010 municipal election, Cullen said he thought it "absolutely" would be.

Coun. Diane Deans, who represents Gloucester-Southgate, has already publicly expressed her concerns about the plan's ballooning costs.

"And we're nowhere near putting a spade in the ground yet," she said. "I'm very concerned about whether or not our funding partners would even consider funding a project as costs are rising this much."

They're also becoming too much for taxpayers to bear, she said. "We were hoping to put a tunnel in the ground, not drive the city into the ground."