If Council cancels the already-approved LRT Plan, local taxpayers are likely on the hook for tens of millions of dollars in money already spent and committed to the project.
By Ryan McGreal
Published April 24, 2017
The agenda for the upcoming City Council meeting on Wednesday, April 26 includes a staff report (item 7.8) on "Cost implications to the City of Hamilton should the Light Rail Transit Project be Discontinued".
At issue here is the $72 million that has already been spent on or committed to the Hamilton LRT project: $16 million spent so far by the City, $15 million spent by Metrolinx, and another $41 million committed by Metrolinx or the City in contracts to third parties.
|Spent to Date||Remaining Commitments||Total|
|City Project Implementation||$5,139,810||$13,059,500||$18,199,310|
Metrolinx has proceeded with implementing the LRT plan after Council voted to support implementing it via the following votes:
Accept the LRT funding that the Province committed in May 2015 through the staff report "Fostering the Light Rail Transit (LRT) Project", CM15014;
Sign the Memorandum of Agreement [PDF] with Metrolinx, committing the city to "proceed expeditiously, diligently and in good faith and in a co-operative and collaborative manner to negotiate and enter into a definitive agreement or agreements to ... facilitate and expedite the construction and completion of the Project";
Sign the Real Estate Protocol [PDF] with Metrolinx, committing the city to "act collaboratively, cooperatively and in good faith with a view to ensuring acquisition of the real properties within the applicable delivery dates."
Council also approved the City entering a contract with transportation planner Steer Davies Gleave to implement the project.
This should not be news to any Councillor. Last October, City Integrity Commissioner George Rust-d'Eye already warned Council that it had committed to implementing LRT and that backing out of the plan would expose the city to legal risk for the money spent and committed.
The new report notes that Metrolinx has not yet made "a determination on whether it would seek any recovery of LRT expenses," but "it is fair to expect that if the City decided to discontinue the LRT Project, there would be a negotiation between the Province and the City on what discontinuance would cost, if anything, and how the parties would proceed."
With respect to money committed by Metrolinx in contracts, "the contractors would likely seek lost profits and other damages to place the contractors in as good a position as if all contract obligations had been fulfilled." In other words, just because the money has not already been spent, that doesn't mean we won't be on the hook for it.
If Metrolinx or the Province does initiate legal action against the city in order to recover its losses, "the likely financial risk exposure would be limited to monies spent and/or committed, minus any money that could be saved through mitigation measures", for example, redeploying Metrolinx staff dedicated to Hamilton LRT to other projects in order to avoid severance pay.
For those Councillors who claim to be afraid of the unknown operating cost of LRT, despite the fact that we already have a good context for what that cost will be, I hope they will consider the fact that they are risking up to $60 million in wasted spending and legal penalties - more than a decade of gross LRT operating costs!
With files from Nicholas Kevlahan
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