Uncertainty lingers over LRT delay cost to city

Questions linger about how insulated municipal taxpayers are against extra costs related to the LRT delay.

Hints of uncertainty were sprinkled through a finance and economic development committee meeting this week as city managers tried to assure politicians that the $2.1-billion fixed-price contract was virtually bulletproof.

For some councillors, one of the most surprising facts revealed by city lawyers on Tuesday is that there is no detailed language about what municipal costs the Rideau Transit Group will be cover during the delay period.

Councillors heard there is no specific clause in the agreement that perfectly responds to the city’s extra costs in the event of a missed handover date. The contract framework will sort it all out, lawyers assured politicians.

Part of that framework is a process the city and RTG have agreed to use to settle disputes, but if the two sides can’t agree on the costs through negotiations between senior officials, mediation or arbitration, there’s a chance the disagreements could end up in the courts.

The city expects to take possession of the Confederation Line LRT on Nov. 2, a delay of more than five months from the May 24 handover date written into the contract with RTG. Under the contract, the builder is allowed to push the handover date without paying a cash penalty to the city.

That means the city will continue running a high-capacity bus system through the downtown core between June and November. OC Transpo will continue to pay drivers, buy fuel and cover any bus repairs related to that service. For those drivers who transitioned to LRT operations, their training will last several months longer than anticipated. Everything comes with a price. Mayor Jim Watson seems confident RTG will be responsible for all of the city’s delay-related expenses, but some of this council colleagues are skeptical.

“Is this going to cost us a whole lot more money or not?” GloucesterSouthgate Coun. Diane Deans said on Wednesday.

Deans still can’t believe the city can’t use a $1-million penalty clause against RTG for not meeting the contracted handover date.

“Once burned, twice shy,” Deans said.

“When I hear the same people suggesting RTG will cover the city’s additional costs, I just want to know what the contract says.”

“Why should the taxpayer have to pay?” River Coun. Brockington asked. “I’m not willing to relent on any dollar.”

The city trumpets its fixed-price contract with RTG to guard against cost overruns on the construction of the LRT system, but reimbursing the city for operational expenses is another matter.

The city is putting together a rundown of expenses it will rack up because of the delay. It will likely include everything to do with Transpo operations and costs related to keeping the O-Train construction office going.

“We are now incurring new costs,” Brockington said, and he has written to city management asking for a complete list.

Kanata North Coun. Marianne Wilkinson said she has several questions about the impact on bus service because of the LRT delay, in addition to questions about RTG’s approach to covering the city’s costs.

“I have a lot of concerns,” Wilkinson said. “Whether (RTG) is going to agree to it or fight it, we don’t know.”

Wilkinson believes her community receives a lesser bus service compared with other areas. Maintaining a bus line between downtown and west Ottawa for at least five more months will give transit commuters more headaches as buses navigate downtown streets, she said. When LRT is running, customers will take a train through downtown to Tunney’s Pasture and transfer to a bus for the rest of the westbound trip.

RTG wasn’t answering questions on Wednesday, deferring to the city for any LRT delay-related information.

There are even outstanding questions about the financial impact on the city because of the Rideau Street sinkhole in June 2016.

According to the city, RTG is delivering the LRT system late because of the impact of the sinkhole on construction timelines.

Could the city be on the hook for any costs to fix the sinkhole, even if RTG is perceived by city hall officials to be the only one responsible?

“They are making an insurance claim for the sinkhole and I would imagine that that discussion with their insurance company will determine whether they wish to seek any damages from the city,” city manager Steve Kanellakos told council members at the finance and economic committee meeting on Tuesday.

Kanellakos reminded councillors that independent reports on the cause of the sinkhole show it wasn’t the city’s fault.

“We think they have a very weak case to be able to put this back on the city when they happened to be tunnelling in the exact spot where the sinkhole happened,” Kanellakos said.

Of course, anyone can sue anyone.

RTG can choose to sic its lawyers on the city.

And the city, if it feels it’s owed money from the LRT delay, can go after RTG if the dispute process doesn’t work in taxpayers’ favour.