No cost yet for tearing up LRT contract, documents show
OTTAWA -- New documents prepared for a special meeting of the City's Finance and Economic Development Committee (FEDCo) show the City needs more time to figure out how much it will cost taxpayers to get the City out of the 30-year contract with Rideau Transit Group to maintain the Confederation Line.
Capital Coun. Shawn Menard had submitted a request asking for a detailed breakdown of the estimated cost to the City for terminating the contract with RTG and their maintenance arm Rideau Transit Maintenance (RTM).
In a response, prepared for the March 9 meeting, City Staff say the contract is complex, and that a detailed analysis of termination will not be ready because of those complexities.
"A detailed breakdown of the estimated cost to the City should we terminate the contract with RTG/RTM … will require significant time and resources, given the complexity of the Project Agreement and the need to look at all options under the Agreement," the document says. "That is due to the fact that the cost to the City of termination must necessarily include not only those costs directly associated with termination, but also any costs arising from setting up an alternate service provider."
City Manager Steve Kanellakos has begun a thorough review of the options. The mayor has requested the report be brought before City Council as soon as possbile. Staff suggest the report will likely be presented to council in camera (i.e., it won't be presented publicly) and it will mostly likely be ready for the March 25 council meeting.
Can the City buy the line?
Menard had also asked about the feasibility of buying a controlling interest in RTM/RTG through the purchase of equity.
Staff say this is not possible because of rules laid out in the Municipal Act.
"Finance and Legal staff have advised that the City is not allowed to directly purchase shares in specific private companies, including those that comprise the Rideau Transit Group (RTG) partnership," Staff say. "This is due to restrictions contained in the Municipal Act, 2001 which, among other things, require that investments be made through prescribed third-party investment managers, namely the Local Authority Services and the CHUMS Financing Corporation (“LAS”). LAS invests through a pooling of municipal funds in a diversified portfolio and does not purchase shares that are not listed on a recognized Canadian stock exchange."
FEDCo meets March 9, and will hold a second, special meeting one hour after that meeting to discuss LRT-related questions.