OC Transpo's finances worse than imagined: Sutcliffe

Ottawa Mayor Mark Sutcliffe says OC Transpo is facing a "worsening financial situation" that is worse than he imagined when he decided to run for mayor.

Sutcliffe ran on a platform of fixing public transit in Ottawa, after numerous issues on the LRT and flagging ridership because of the COVID-19 pandemic.

City councillors received a technical briefing on the transit system's long-term plan on Monday, which projected a dire outlook of $6.6 billion in budgetary pressures over the next 25 years, more than half of which is linked to lower ridership.

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It also means the future of Stage 3 of LRT to Kanata, Barrhaven and Stittsville could be in jeopardy, though Sutcliffe says he believes it will eventually be built.

Councillors heard that the financial case for Stage 3 is not strong. First, it is unaffordable for the city, and would need to be funded 100 per cent by senior levels of government, who have not committed any funding to it. Second, Stage 3 would cost an estimated $64 million per year to operate, with only an expected 2 per cent increase in ridership, bringing in around $5 million annually. Savings from replacing bus routes would also be minimal, staff said.

Construction on Stage 3 was set to begin once Stage 2—which is delayed—was complete, but staff said Monday that the city could delay Stage 3 until the financial situation stabilizes, only build parts of it—such as only connecting to Kanata or only to Barrhaven—or scrap it all together and run bus rapid transit instead.

Speaking to reporters after the technical briefing, Sutcliffe said Stage 3 remains an important part of the city's long-term transit plan.

"I still believe that we can deliver Phase 3 to the residents of Barrhaven, Stittsville and Kanata. I think it's an important part of the system and our population is going to grow significantly over the next 25 years. We know that," Sutcliffe said. "We're not ready to push the button on Phase 3 this week anyway. We have a lot of work to do before we get to a point about making a decision about Phase 3, so we have to do that work and we have to have those important conversations with other levels of government because we were always counting on those other levels of government to pay the cost of Phase 3 anyway."

To date, the city has not signed any agreements with other levels of government or any private sector partners when it comes to Stage 3.

"As such, any decision regarding the future of Ottawa’s light rail network would not have any associated financial penalties," deputy treasurer Isabelle Jasmin said in a statement to CTV News Ottawa.

Sutcliffe said that Stage 3 might be unaffordable now, but there are numerous decisions the city can make in the next 10 years to improve OC Transpo's long-term finances.

"I don't think it's one conversation that's going to happen and we make a bunch of decisions and then we're done," he said. "I think the job we have in front of us has not actually changed that much… We have to fix Phase 1 of light rail; we have to make sure Phase 2 is introduced smoothly and effectively and that it's working; we have to improve our bus system so that it's serving residents in the areas where they need it and not where they don't; we have to make difficult decisions about how we pay for public transit… All of the decisions we make over the next 10 years will change the picture for the next 25 years."

Sutcliffe said he is confident the 2024 budget would still cap the transit levy increase at 2.5 per cent and he's looking at solutions that don't include increasing it. 

Mayor calls for more government support

Sutcliffe renewed calls for support from the federal and provincial governments.

OC Transpo's 2023 budget included a $39-million hole that staff expected would be filled by upper levels of government, as it had in previous years during the COVID-19 pandemic, but no extra funding was announced in the federal and provincial budgets for this year.

Speaking to reporters, Sutcliffe said Ottawa should be recognized as a unique case for extra help.

"I think Ottawa is justified in asking for help because of the unique circumstances of being the nation's capital," Sutcliffe said.

"Federal government decisions have had an impact on transit ridership in Ottawa and, frankly, the future of downtown. We have a federal government that is talking about moving out of many of its downtown buildings, which is going to present a significant challenge for us as a community... I respect those decisions, those are their decisions to make, but there are consequences at the municipal level.

"Similarly, I would say we have a conversation that we're having with the provincial government because we don't get the same deal as Toronto and other cities in the GTA when it comes to funding transit operations and maintenance and life cycle. The provincial government pays for a lot more of that in other municipalities than it does in Ottawa and that's got to change in the future."

Premier Doug Ford has previously said he would not commit any provincial funding to Stage 3 of LRT until the issues with Stage 1 are sorted. 

Staff presentation