OC Transpo: Study of fare-free transit could cost city nearly $1 million

Studying the effects and costs of providing permanent, free transit in Ottawa could cost the city close to $1 million, according to city staff.

In a memo to the City Council sent Monday, Rene Amilcar, director general of transit services, and Wendy Stefanson, the city’s chief financial officer, said public transportation consultant Brendan Hemilly has been working with the city to develop a possible structure for a study to answer the questions identified by the Council on tariff structures.

According to the memo, staff estimated — based on Hemily’s advice — that a full study of the matter would take up to a year to complete and cost between $700,000 and $900,000, including project management staff time.

Currently, the memo says, there is no funding available to conduct this study unless other work is postponed to find the money. The money could be included in the 2023 budget if council directs staff to do so.

Staff is considering three possible fare structures for OC Transpo: free transit for all passengers, changing the revenue/cost ratio and eliminating the 2.5 percent annual fare increase.

Eliminating the fees would cost an estimated $209 million based on pre-pandemic transit usage. Staff say the move will increase the average property owner’s transit fee by an additional $482 in the first year.

Shifting the revenue-to-expenditure ratio from the current 45:55 to the proposed 30:70, meaning fares would account for 30 percent of transit funding and taxes would cover 70 percent, would increase property taxes by an average of $162 per year.

Eliminating the 2.5 percent annual rate increase would cost the average taxpayer an additional $11 per year.

The COVID-19 pandemic significantly reduced transit traffic in Ottawa, and it has yet to recover. While higher levels of management have helped offset lost revenue during the pandemic, the council directed staff last spring to draft a plan to explore different fare structures for future policy decisions.

The City Council is currently on summer break and approaching the pre-election period in which financial decisions are limited. Municipal elections will be held on October 24.