OTTAWA -- The Ontario government is threatening to withhold $60 million in funding for Ottawa’s light rail system because of the problems plaguing Stage 1.

A letter from a senior ministry of transportation official to the city’s director of rail construction says the province has “noted some issues” facing Stage 1 of Ottawa’s LRT project, including the derailments in August and September of this year.

“We would like assurances that provincial funding is being used for assets and infrastructure that are safe and meet industry standards,” says the letter obtained by Newstalk 580 CFRA's Bill Carroll. It was sent to the city on Tuesday evening.

The Confederation Line has been shut down since the second derailment on Sept. 19, with OC Transpo running bus service in its place.

The province is putting $600 million for Stage 1 of Ottawa's LRT and $1.2 billion for Stage 2 LRT, about one-third of the project.

In the letter, the ministry of transportation sets out three conditions for releasing a $60 million holdback to the city:

  • Confirmation that the Transportation Safety Board investigation into cracked wheels is finished, and an attestation that the city has addressed the recommendations or a developed a plan to address them.
  • Confirmation that the TSB reviews of the August and September derailments are finished, and that the city has either addressed them or developed a plan to do so.
  • An attestation from an independent engineer.

The $60 million is being held back pending a final compliance audit report, which the city hasn't yet submitted.

A spokesman for Mayor Jim Watson said the letter appears to be standard due diligence by the province.

“The City has already undertaken to address all issues raised in the letter,” Patrick Champagne said in an email. “Mayor Watson has asked the City Manager to review the letter and to provide a more fulsome update to Council and the public in the coming days.”

Speaking to reporters after Wednesday's city council meeting, City Manager Steve Kanellakos said the letter came as a surprise on the eve of budget day, but he's confident the city will meet the province's expectations.

"There's no issues in my mind of us not being able to respond fully to what they've asked. I don't believe that $60 million holdback is in jeopardy at all," he said. "Anything they've asked is actually in execution mode right now and I'm certain we will satisfy the questions that they have under the agreement we have with the ministry of transportation."

Watson stressed that the city will not return service to the LRT until it is deemed safe.

"Bottom line remains that until we are 100 per cent satisfied with the safe return of the service, we won't push an opening date just to meet a specific timetable," he said.

Kanellakos clarified that this is a normal process for projects of this magnitude.

"We received all of our funding for Stage 1. The last piece is to submit the final audited statements that are still in progress. We're still working on that, that's not unusual for a project of this size, and now they've put on three more requirements before they release that 60 million," Kanellakos explained. "I have no doubts at all that we're going to be able to meet those requirements. In fact, we're well underway and on our way to complete what they've asked for."

Correction:

An earlier version of this story said the province is threatening to withhold $60 million in funding for Stage 2 of Ottawa's LRT project. In fact, the money is for Stage 1.