Council asked to approve $152M in additional contingency funding for Stage 2 LRT

City councillors are being asked to approve additional contingency funds for Stage 2 LRT after all three branches of the project were delayed.

Stage 2, which expands LRT to the east, west, and south, was approved in 2019 with a contingency fund of $152.5 million to account for delays, issues, and rising costs. In 2022, council approved increasing the contingency budget to $177.6 million.

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Now, staff say, nearly all of that money is spent or has been committed to improvements to Stage 2. Approximately $172.5 is spoken for, contributing to design improvements, design changes and regulatory updates. The lengthy delays the project has since faced have also increased costs on staff and contractor labour, external legal support and consulting.

Other factors increasing costs include the noise barriers being built along Highway 417 and upgrades at the transit control centre. Recent regulatory changes that prevent dumping excess soil from excavation at the Trail Waste Facility also means additional fees and hauling mileage to bring excess dirt elsewhere. The city says more than 2.4 million cubic metres of soil will be excavated to construct the Stage 2 Confederation Line Project, which equals approximately 278,000 standard commercial dump truck loads over the lifetime of the project.

City staff are requesting an additional $42 million for project oversight costs, $35 million for major variations, $25 million for soil management, and $50 million for general contingencies.

"As a result of the emerging issues, and with consideration that the originally contemplated contingency fund and project budget was intended to be allocated through to original completion of Trillium Line 2022 and the Confederation Line in 2025, the remaining budget will be insufficient to deal with expected remaining pressures," a report prepared for the finance and corporate services committee says.

The city must also refinance some of its debt due to a change in gas tax funding from the provincial government.

The dotted line had already been signed on Stage 2 LRT in early 2019 when the Ontario government decided to cancel the planned doubling of provincial gas tax revenue. That extra money had already been included in the $4.6 billion plan for Stage 2.

Staff are recommending removing the remaining amount of unfunded provincial gas tax of $457 million and offsetting it with an increase in development charge revenue of $433 million and transit tax debt of $24 million.

The LRT subcommittee heard this week that the city will not commit to a firm date for opening the Stage 2 Trillium Line expansion, which was originally supposed to have been completed by August 2022. OC Transpo general manager Renée Amilcar is now tentatively saying spring of 2024. The eastern extension of the Confederation Line to Trim Road has been delayed until early 2025 and the western leg to Moodie Drive and Algonquin College isn't set to be complete until late 2026, about 17 months behind schedule.

The finance and corporate services committee meets Nov. 7. If approved, plans will rise to city council on Nov. 22.