Millions from City finally starts to flow to operator of Ottawa's troubled LRT system
OTTAWA -- The consortium that built and now maintains Ottawa's $2.1 billion Confederation Line LRT is being paid under one third of what they would normally be owed, according to new figures from the City of Ottawa.
In a memo to city council on Wednesday, Transportation Services General Manager John Manconi said the City was required to pay the Rideau Transit Group (RTG) under terms of the project agreement (PA) for service in September and for a single day in August.
"As per the PA, the maintenance term starts the day after Revenue Service Availability is achieved, which was August 30, 2019. Therefore, the first Contract Month with RTG was August 2019," Maconi said. "Therefore, the first contract month consisted of one day, August 31, 2019."
Manconi said a payment of $5,155,164.33 was made to RTG on Nov. 15, 2019.
"If the City does not make payments that it is obligated to make under the PA, RTG may allege that there is a payment default by the City which can lead to serious consequences, including suspension of the performance of the Maintenance Services by RTG," Manconi said. "As the City is requiring RTG to comply with its obligations under the PA, the City in turn must also comply with its obligations including the payment provisions."
In a second memo sent Wednesday, Manconi also said the City sought legal advice regarding payments to RTG for the remainder of the line's service life thus far and will be making additional payments.
"Having completed a careful review of RTG’s invoices and supporting documents, the City will be making certain payments in relation to (a) RTG’s invoices relating to Maintenance Services for October 2019 to January 2020; and (b) RTG’s invoices relating to Maintenance Services for May to July 2020," Manconi said.
For October to January, the City will pay RTG $5.47 million out of the $17.68 million they were owed, following deductions for service problems.
RTG is owed $12.93 million for service from February to April, but the City has yet to calculate deductions, so no payment has been made.
For service from May to July, RTG is owed $12.66 million. The City is deducting approximately $683,000, for a net payment of $11.79 million that will come at a later date.
"Subsequent to the release of these payments for invoices between October 2019 and July 2020, the City will have paid approximately $17.45 million against a total payment amount of $43.27 million (prior to Deductions). Note that all numbers shown exclude HST," Manconi said.
The City is also holding back $16 million because RTG had not achieved the promised 15 double train cars during peak service until Aug. 7.
"As a result of the current situation with the fleet and the cracked wheels, RTG and the City have agreed that RTG will not be entitled to the $16 million currently being held by the City until September 08, 2020, when 15 double car trains are used for peak service," Manconi said. "Accordingly, for the 6 month of August 2020, the City will make deductions in relation to RTG’s performance based on a schedule with 13 double car trains in peak service."
Manconi says with the $16 million vehicle payment being held back, and the other deductions that have been made so far, RTG has received a total of $17.45 million out of approximately $60 million that they would have been owed had the system run without major issues.
"Further payments will be made to RTG as the analysis of invoices continues and the Vehicle holdback will be released when 15 double car trains are available for use in peak service," Manconi said.
Emem Etok says she commutes from Hurdman to Bayshore every day for work and her experience this summer has been pleasant.
“It’s really frequent but on Sunday’s it’s a bit slow,” Etok said. “But throughout the week it’s actually perfect.”
Allan Hubley chair of the Ottawa transit commission thinks things are finally on the right track at RTG. He is hopeful that by the end of the summer the backlog of issues that need to be resolved with the system will be cleared and they can be ready for commuters once the weather gets cold.
“This is good news it means they are getting the work done,” Hubly said. “So those that are making the decision about going back to work in the fall they know that RTG and the City Of Ottawa are doing everything possible to make sure their transit commute is a pleasant one”