Federal transit funding jump could be major boon for City of Ottawa

Mayor Jim Watson called the budget "good news" for Ottawa. The most important change? The federal government is promising to pay for up to half the costs of transit projects instead of a third. This could potentially free up hundreds of millions of dollars for the city.

Short-term infrastructure plan could inject many millions into city in next few years

Mayor Jim Watson is calling the latest federal budget "good news" for Ottawa, and with the city poised to save millions on transit projects, it's easy to see why. (Joanne Chianello)

Mayor Jim Watson called the budget "good news" for Ottawa and it's easy to see why — at least from a city perspective.

That the Liberal government delivered on its election promise to increase infrastructure spending by $60 billion over the next 10 years isn't that surprising. The fact that the government hasn't quite yet figured out the framework for doling out the money out past the next couple of years did set a few eyeballs rolling, but chances are it'll get worked out.

The big news on the city front are the changes to transit funding: the Liberal government is both expanding the scope of what it will pay for and promising to shell out for up to half the costs of transit projects instead of the traditional third.

It's such a potential game-changer for the city that the mayor noted the page number in the budget where the promise was made. (It's 92.)

What's not clear is whether the promise to pay for 50 per cent of costs is just for the first phase of the transit infrastructure funding program, or whether the federal government will continue to pay for half of new public transit projects for the remainder of the 10 years.

Mayors expected to keep pushing

Officials told CBC News that projects funded under the first phase need to be completed within a three-year period. The parameters for longer-term projects, which will start to be funded three years from now, will be set after the federal government consults with municipalities and other stakeholders. Mayors, who have generally embraced the new Liberal government as city partners who recognize the fiscal capacity limits of municipalities, are expected to push hard to keep that 50-per-cent funding.

"That's certainly the approach I'm going to take," Watson told reporters Tuesday.

He sounded as if he was already counting on the cash, pointing out that a 50-per-cent investment by the federal government provides the city "the opportunity to free up $500 million."

Consider that the LRT expansion, known as Phase 2, has a price tag of about $3 billion. Previously, it was understood that the three levels of government would each chip in $1 billion.

City could pay just $500M for Phase 2 LRT

But if the federal Liberals pony up $1.5 billion for the project and the provincial Liberals stick to its vow to contribute one third of the costs, that leaves Ottawa on the hook for just $500 million.

An additional $500 million in city coffers could pay for lots more transit. It could pay for both LRT extensions to Trim Road and an airport link, which are expected to cost about $160 million each, with some to spare.

Or perhaps the money could be used to extend light rail to Kanata sooner than the currently planned 2031. Or maybe the city will want to actually save the money — remember, it did end 2015 with a $40-million deficit, the largest in its history.

But even leaving aside what happens in the longer term, the city is poised to save tens of millions of dollars from the new program in the next couple of years.

City poised to save millions more

Construction is slated to start later this year on the Transitway extension from Bayshore Station to Moodie Drive. The city was supposed to pick up the entire $50 million tab. But as it's a "shovel-ready" project, it could very well be eligible for federal money the city hadn't anticipated. That would be a savings of $25 million.

The city is also in the planning stages for Phase 2 of the LRT, with hopes of starting construction in 2018. Municipal officials currently have a $20-million ask into both the federal and provincial governments to cover $60 million of preliminary work. If the federal share jumps to 50 per cent, the city's share drops to only $10 million  — a $10 million savings.

Between these two transit projects alone, the city could save $35 million. (It's not a bad time to upgrade some buses, which would also qualify for 50-per-cent federal funding.)

But the federal government's largesse doesn't stop at picking up half the transit cheque. 

Now, the so-called "soft costs" of a project — think design plans and engineering studies, all of which cost millions — are also eligible for federal funding for the first time.

All of this means the city can do more faster. And not just on transit, although that might be the area where the new funding makes the most dramatic difference.

Affordable housing, central public library, green projects

The budget lays out $3.4 billion in spending on "social infrastructure" over the next five years. That includes affordable housing (both new units and upgrades to existing housing), child-care facilities and cultural and recreation spaces.

Watson said there are "millions and millions of dollars" worth of affordable housing projects ready to go. And this category of cash could also be put toward a central public library in Ottawa. A few days ago, he instructed city staff to start working on a list of projects that could be completed in the next few years.

And then there's the green infrastructure fund, which will help pay for a host of initiatives from modernized wastewater plants to electric car recharge stations. Ottawa isn't likely in line for much of that pool of cash, as funds for the Ottawa River Action Plan were committed last year by the then-Conservative government. But we could get a new bridge out of the deal.

The cycling and pedestrian bridge connecting Clegg Street and Fifth Avenue across the Rideau Canal qualifies under green infrastructure as is would encourage environmentally friendly modes of transportation. Environment Minister Catherine McKenna — who is also the MP for Ottawa Centre where the bridge would be located — said last month she'd push to get the $18-million bridge funded and built by 2018. 

Watson admitted that, as a council, "we still have a long way to go in negotiating with the federal government." Still, the municipal measures in the budget could add up to tens of millions more for the city in the short-term and hundreds of millions over the course of the decade-long infrastructure program.

Add the fact that the budget earmarks millions more for local museums and art centres and energy retrofits to federal buildings in the national capital, and it becomes apparent how the budget could indeed be considered "good news" for Ottawa.


  • An earlier version of this story included a statement by Mayor Jim Watson that the Clegg Street bridge project could begin within months. The mayor's office has since corrected that information, and now say construction on the bridge could begin in the fall of 2017.
    Mar 23, 2016 5:39 PM ET

About the Author

Joanne Chianello

City affairs analyst

Joanne Chianello is an award-winning journalist and CBC Ottawa's city affairs analyst. You can email her at or tweet her at @jchianello.