Special Report: Light Rail

Who Changed the Total for Hamilton's LRT Project Cost?

The third-party cost summary actually finds Hamilton's LRT fits within the Treasury Board-approved 30-year budget.

By Ryan McGreal
Published January 14, 2020

Just where did the inflated $5.5 billion figure for the Hamilton light rail transit (LRT) project come from? Ontario Transport Minister Caroline Mulroney claims it came from an independent third-party cost analysis, but that story falls apart on closer inspection.

The third-party cost analysis [PDF] only finds $3.65 billion in total provincial costs over 30 years of operation, which is within the Ontario Treasury Board's approved 30-year budget of $3.66 billion. That scary $5.5 billion total was added onto the front page of the summary without any explanation of how the two contradictory sets of numbers are supposed to add up, and the Ontario Ministry of Transportation (MTO) is hiding behind a confidentiality agreement with the third-party analyst.

An email response from the MTO confirms that the Minister's handout included "the key information from the latest cost estimate" by the third-party vendor. They declined to provide further information on the terms of reference or assumptions that went into the analysis, noting, "the full report includes proprietary and commercially confidential information."

Likewise, when RTH contacted the third party consultant to ask for help understanding the numbers, they declined to comment on who actually came up with the $5.5 billion total or how it was calculated, also citing the confidentiality agreement with the government.

So we still don't know how the alarmist total on page 1 of the Minister's handout is meant to correspond to the third-party cost summary on pages 2-6. The front page doesn't even try to look like it comes from the same report as the rest of the document. Its fonts, colours, layout and even page orientation are sharply distinct from the consistent style across pages 2-6.

Cost Estimate Not Over-Budget

What we know is that the third-party cost summary only adds up to $3.65 billion, not $5.5 billion. That $3.65 billion fits the Treasury Board's already-approved budget. In other words, the third-party cost summary actually finds the project is on budget, not over-budget!

And the cost summary itself is a very conservative 'Class D' estimate, representing padded costs piled on top of padded costs. Each line item already includes room for contingencies and escalations, and then the total has an additional $320 million contingency piled on, plus another $190 million escalation.

The analyst never contacted City staff for information on the municipal context, and at least some of the line-level numbers are suspect - like items 40.05.02 and 40.05.03 on page 4, whose cost estimates appear to have been swapped.

In other words, the document has had no independent peer-review and no direct input from the organization best equipped to frame its cost estimates more accurately. Nevertheless, its very conservative conclusions still put the project as a whole within the provincially-approved budget.

Metrolinx itself notes in the internal document released last week that the only project component that has gone over-budget is $87 million in "professional services" - hardly a valid reason to pull the plug on a billion-dollar capital investment!

$5.5 Billion Not Credible

So where did the $5.5 billion actually come from? The Province refuses to say, and the more we learn about their justification to cancel the Hamilton LRT project, the less credible it looks. It looks exactly like a scary, made-up number meant to justify treating Hamilton's LRT project differently from every other project in Ontario.

Ontario Auditor-General Bonnie Lysyk is reviewing the reasonableness of the government's cost estimate as part of a broader value-for-money audit of Metrolinx, but it may be several months before we see her conclusions.

Meanwhile, the Province is forging ahead with a "task force" that will review transportation investment options for Hamilton, including reviving the LRT plan.

Note: Hamilton Light Rail has launched a campaign calling on Hamiltonians to send Premier Ford a message calling in him to fix Minister Mulroney's mistake and get the Hamilton LRT back on track. Please join the call to action and make your voice heard.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan wrote a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. His articles have also been published in The Walrus, HuffPost and Behind the Numbers. He maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.


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By Haveacow (registered) | Posted January 14, 2020 at 15:15:30

As an independent Urban Planning Consultant, I have worked across the political and professional spectrums, with developers all the way over to community groups, other professional planning consulting firms, professional business groups and local governments. Hamilton's LRT financial approval reversal by the provincial government has all the hallmarks of a political and or professional score settlement.

Politically, this was a Liberal project, supported by the NDP, prefered by urban and or more progressive voters who wanted change. It was fought by generally Conservatives politicians and voters who were mostly but not all suburban, who wanted less complete or no change at all. Many of the so called BRT supporters on council and the local media will disappear now. They may make a brief resurfacing if and when the province's, Hamilton's Transit and Transportation Task Force does any public hearings.

What really surprised me about the public reaction of Hamilton's LRT Line was that many businesses, including the Hamilton Chamber OF Commerce was on the "pro LRT" side and still a small group of older voters and intrenched businesses were so able to use obvious political ties to the provincial Conservatives to slowly strangle, then kill such a popular project.

What needs to be done, is a listing and total amount of lost investment in Hamilton due to the cancellation of LRT. This total should be given in dollars and projects lost!. In Ottawa, the 2006 council vote that killed the North-South LRT project almost didn't happen because developers and business people got up and started stating how much money they and by association, the City of Ottawa was losing. Anti-LRT proponents official and unofficial at Ottawa's version of the Transit and Transportation Task Force (not provincial, all local) and the 2010 municipal election, were bombarded with those numbers of lost projects and costs, every time they publicly spoke in council or in media. This may take awhile but it's my feeling that, the true extent of the loss of the B-Line LRT Project will not be understood for a while especially, by the people who were against the project. Every project shelved and or canceled, every vacant lot which is now gas an advertisement for a new business and buildings on or near the line needs to be counted and if possible, recorded.

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By Haveacow (registered) | Posted January 14, 2020 at 15:38:47

One easy way to start is with the Councilor who has McMaster University as part of his or her's ward. During the 2006 debate about the fate of Ottawa's North-South LRT, the local councillor whom represented Carleton University stated that the value of projects lost just at Carleton University alone was (6 projects) valued at just above $500 million. This was important because it exceeded by $70 million, the entire official 23 year (1983-2006) running total of the value of development produced along the entire length of the Transitway Network at that time (The "Transitway" is the marketing name of Ottawa's BRT Busway network).

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