When Jim Watson promised during his 2010 mayoral campaign that the first part of the Ottawa light rail line would be on time and on budget, he probably could not have imagined that the banal political slogan would become the centerpiece. to a public inquiry ten years later.
But Watson’s insistence that the Confederate Stage 1 be detained at $ 2.1 billion during this campaign – despite the fact that the figure was a preliminary estimate – was one of the focal points in the first few days of the long-awaited LRT public inquiry. .
This was a key line of interrogation on Wednesday of former deputy mayor Nancy Sheppers by commission co-chair John Adar.
Adair cited a 2009 report to the board of Schepers, an engineer, which shows that $ 2.1 billion is an early estimate and could rise or fall by up to 25 percent when more details are confirmed.
But after Watson launched a $ 2.1 billion campaign, that figure came to life on its own, the lawyer said.
Ottawa Mayor Jim Watson, pictured here in a 2015 photo, gave life to the $ 2.1 billion LRT price cap by promising to implement the project on time and within budget for the 2010 election. heard from the LRT inquiry. (Alistair Steele / CBC)
“My simple thought is that Mr. Watson, as he was then, and the other board members who managed this $ 2.1 billion platform – on time, on a budget – gave the very promise to the public that you, as an experienced professional, “They weren’t ready to go to the council, were they?” Ader asked.
“In the absence of ratings, I agree,” Sheppers said. – Yes.
But she also told Adair that she was not very worried about Watson’s political mantras she had heard before.
“This isn’t the first time this has happened,” Sheppers said.
“And, you know, as staff, we report to the council. And if that was unrealistic and we said at one point, “You know, that’s not possible,” then we’re going to have to do our homework and have to justify ourselves to the committee and the council. “
Drilling into early urban decisions
The first three days of the four-week investigation revealed a number of key issues that the commission appears to be looking at carefully, from whether the policy incorrectly limited budgets and deadlines to whether the details of the contract ultimately failed.
WATCH LRT’s low budget has led some to worry about a “failed order”, the inquiry said:
LRT’s low budget has led some to worry about a “failed order”, according to the inquiry
Rob Pattison, who heads the LRT infrastructure department in Ontario, says he is worried that the budget is too low for companies to respond and will lead to few or no applicants for the project.
The inquiry has heard several times that budget cuts are a potential problem, and a number of key players say they are worried that no one will bid at that price.
On Tuesday, another commission lawyer asked the former city treasurer if there had been discussions about whether the price cap could make companies “keep their promises” to keep their budgets.
Political pressure on the budget and schedule is not the only way investigative lawyers are investigating whether city decisions – taken before the contract was awarded – have contributed to the Confederation Line’s problems.
One such solution? To go with a private-public partnership, or P3 model, in its contract with Rideau Transit Group (RTG).
The Confederation Line was the first time this funding model was used for a municipal LRT project in Ontario, the inquiry said.
That’s why provincial officials – including Watson, who had just stepped down from the Ontario Liberal Cabinet in late 2009 – wanted Infrastructure Ontario to advise the city on the deal.
The ideas behind the payment plan
One of the key components of this type of transit financing model is that the winning initiator designs, builds and maintains the system, but also takes part of the financing.
In the case of the Confederation Line contract, RTG took on $ 300 million in private funding, which the city will repay as part of its monthly fee payments under the 30-year maintenance contract.
This private financing actually costs the city, as a municipality can usually borrow at a much lower rate than corporations. In 2012, the city estimated that it would pay $ 165 million more in interest in 30 years than if it had borrowed the money itself.
(Interestingly, the poll on Wednesday heard that in May 2011 the city did not consider including private funding in its contract unless other levels of government pay for the extra costs. They did not, but the city went for design and build -finance-maintain – or DBFM – model anyway.)
Although more expensive for the city, proponents of public-private partnerships say private funding gives the company an extra incentive to finish on time, as payments do not start until the project is handed over.
The agreement is believed to create a healthy “tension” that pushes companies to meet the project schedule.
John Adar, one of the leading advisers to the Ottawa light rail system’s public inquiry commission, suggested that this type of contract – and strict compliance with it by the city – could have been detrimental to the Ottawa people. (Kate Porter / CBC)
But Adair claims that after the project was more than a year late, the model smoothed out RTG with much-needed money.
Until the rail system was lightly handed over, RTG would not receive its final payment of more than $ 200 million, while costs – including debt service of $ 300 million – continued to accrue.
“RTG was under enormous financial pressure because of the model,” Adair told Schepers, suggesting the consortium had been “killed financially”.
Schepers withdrew, claiming that RTG’s partners – SNC-Lavalin, ACS Infrastructure and Ellis Don – were big players who needed to know what they were doing.
However, according to Adair, RTG cannot afford to postpone the transmission date – but at the same time it cannot ask the city not to implement the contract, because this is “not an option” according to the model.
“The guiding principle at all times should be to seek what is in the best interests of the people of Ottawa, no matter what the treaty says,” Adair suggested to Sheppers, who only allowed for flexibility.
Wednesday was not the first time this week that the commission’s lawyers have suggested that the city that holds the treaty – or at least implements it in its strictest sense – has been disastrous not only to RTG partners but also to Ottawa residents. .
On Friday, former RTG CEO Antonio Estrada will testify, among other things, on how the city has coped with the abyss on Rideau Street.
First, Yves Declerc of train maker Alstom and Manuel Rivaya of OLRT Constructors are due to appear on Thursday.
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