Ottawa

Councillors grill staff about LRT Stage 2 financial risks

Ottawa city councillors peppered city staff Wednesday with questions about the $4.66 billion procurement for the huge second stage of light rail, raising concerns about debt levels and the risk of doing more business with embattled SNC-Lavalin.

$4.66B expansion will extend light rail to east, west, south

 One artist team will integrate art into Montréal, Jeanne d'Arc, Place d'Orléans, Orleans Blvd and Trim stations, another will work on Westboro, Dominion, Cleary, New Orchard and Lincoln Fields stations. The third will work on Moodie, Bayshore, Pinecrest, Queensview, Iris, and Baseline stations. (City of Ottawa)

Ottawa city councillors peppered city staff for hours on Wednesday with questions about the $4.66 billion procurement for the huge second stage of light rail, raising concerns about debt levels and the risk of doing more business with embattled SNC-Lavalin.

Many councillors feel the pressure of having to vote at a council meeting on March 6, the same day they are to approve the city's final budget for 2019.

If the project is delayed, the prices only go in one direction and that is up.- Mayor Jim Watson

The bidding process for the contract to extend light rail to the east, west and south ends of the city has been going on for two years, but councillors only received details on Friday about the top bidders and the $1.2-billion increase on the price of the project.

A joint venture of Kiewit and Vinci Group is to extend the Confederation Line east and west, while a wholly owned subsidiary of SNC-Lavalin, which is part of stage one builder Rideau Transit Group, is the top pick to take rail further south.

Mayor Jim Watson, speaking Wednesday at the special meeting of councillors, said any further delay to do more public consultation would be an "outright abdication of leadership."

The city's second stage of light rail is the right plan at the right time, Ottawa mayor Jim Watson told his council colleagues as the discussed the giant $4.66 billion procurement at a special meeting on Feb. 27, 2019. (Kate Porter/CBC)

"If the project is delayed, the prices only go in one direction and that is up," he said.

Earlier in the day Watson was asked if his meeting in Toronto with Premier Doug Ford had yielded the long sought-after transfer agreement that would confirm Ontario's $1.2 billion for the project, the mayor said to expect good news in the coming weeks.

"I don't want to scoop the Premier," Watson told reporters prior to the special meeting of councillors Wednesday.

Risk, debt top of mind for councillors

At the meeting, Coun. Keith Egli wanted to know the consequences for abandoning the procurement at this point.

The city has also sunk nearly $700 million into the second stage of light rail already, explained Chris Swail, director of O-Train planning.

If the city did not follow through on the contracts, each of the three companies would receive a $12 million stipend, he said.

"These timelines are really tough right now for our proponents as well," he added.

Councillors had many questions about the $700 million in debt the city would take on over three decades, and asked about the risk if one of the builders runs into financial troubles.

If a company were to go bankrupt, a company's assets would be liquidated, and the project would be re-tendered with the city's approval, Swail explained.

Coun. Diane Deans wanted to know if the city should worry about the PC government at Queen's Park changing its policy on gas tax funding, which the city is counting on to pay for LRT Stage 2.

"Silence is golden," city manager Steve Kanellakos answered, pointing out the government has given no such sign and such change would create major issues for municipalities across Ontario.

Universities, colleges, business groups show support

Councillors also heard from some twenty public delegations, including the city's post-secondary universities, business groups and others.

Most showed support for the second stage of light rail, despite a $1.2 billion price increase.

The Kanata North Business Association, for example, said the Kanata technology park had no hope of seeing rail if the second stage of light rail is not built.

'I always thought Ottawa should have a good LRT system, but not like this,' J.P. Unger told councillors during a special meeting of city councillors to discuss the pricey procurement for the second stage of light rail. (Kate Porter/CBC)

Some residents, however, urged councillors to not go ahead with the procurement.

"I always thought Ottawa should have a good LRT system, but not like this," said J.P. Unger. "This will essentially mortgage our city, deprive us of funds to properly maintain roads, bus services city-wide, and much more."

He had major concerns about SNC-Lavalin being top choice for the Trillium Line extension to the south when it faces corruption charges, and called on the city to "put the brakes on this ballooning train wreck."

For a recap of Wednesday's meeting see tweets from CBC Ottawa's Kate Porter below.

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