City staff thought the Scarborough extension could cost $900 million more than the public pricetag -- but didn’t tell council before it voted

Thestar.com
April 1, 2019
Jennifer Pagliaro

Toronto’s city councillors were told a one-stop extension of the TTC’s Bloor-Danforth subway line in Scarborough would cost $3.35 billion when they debated approving the proposal in March 2017 -- even though city officials already thought it might cost as much as $900 million more, according to internal documents obtained by the Star.

Months before the debate, senior city staff had already calculated the final bill to be somewhere between $4.08 billion and $4.26 billion, which was well beyond the $3.56 billion available for the subway.

John Campbell was a Toronto city councillor during the 2017 debate over whether to spend $3.35 billion on a one-stop extension to the Bloor-Danforth subway line. “I never had any sense whatsoever that it would be any more than the amount that they quoted,” Campbell said. “If someone had told me $4 billion ...I’m reasonably confident I would say, ‘forget it.’”

The province claimed last week that preliminary estimates for the Scarborough subway and one other line had at least doubled, which the city denied. But TTC officials told councillors on Wednesday that the total estimate is “just shy” of $3.9 billion -- double the initial, roughly $2-billion estimate that Mayor John Tory and Jennifer Keesmaat said it could be built for despite doubts from senior city staff.

Additional costs, such as debt servicing and some contingency funds, remain unknown. Staff have not provided a detailed breakdown, but are expected to report out on the updated cost this week.

For the first time on Wednesday, TTC officials acknowledged to council that the total in March 2017, when considering all costs, was also $3.9 billion and that it was more than the city’s budget.

Former city councillor John Campbell told the Star that he understood the cost of the one-stop subway plan to be around $3.3 billion when council debated whether to approve it.

“I never had any sense whatsoever that it would be any more than the amount that they quoted,” Campbell said.

“If someone had told me $4 billion -- hindsight is 20/20 -- I’m reasonably confident I would say, ‘forget it.’”

The decision to move forward with the one-stop plan passed then with a 26 to 18 vote.

The debate -- and the cost estimate -- came at a sensitive time. Mayor John Tory was openly planning to seek re-election, and a central plank of his 2018 campaign would be the promise to build the one-stop, six-kilometre subway extension into Scarborough.

Today, Tory stands by the plan.

“City council has voted to move ahead with Toronto’s transit network plan that includes the relief line and the subway extension further into Scarborough,” his spokesperson Don Peat said in an email. “And that plan was overwhelmingly endorsed by Toronto residents in the October election when they voted to re-elect Mayor Tory.”

But even as the $3.35-billion estimate was being debated in public, emails obtained by the Star through a freedom of information request reveal that senior city officials were treating the proposal as though its cost exceeded $4 billion.

“Updated project costs are now $4.08 (billion),” Mike Logan, program manager in the city planning division’s transportation unit, wrote to Keesmaat, who was then the city’s chief planner, on Dec. 22, 2016.

That was $920 million more than the $3.2 billion estimate council was given in July 2016, Logan noted.

“The increased costs will end up being the focus” of the report they were working on, he predicted.

Logan also sent Keesmaat a “cost estimate history,” which he said had been produced by the city manager’s office. It pegged the estimated cost at $4.26 billion, after accounting for the risk of schedule or construction complications and other costs.

Another reference to the higher estimate appears in a document produced by the city manager’s office in January 2017, which presents the cost for the subway extension as “~$4B.”

The final staff report, which was twice delayed, stated that the costs had increased to $3.35 billion.

That figure was critical because any estimate that was significantly more than the original budget of $3.56 billion would have set off alarm bells at council, where the subway project has long been contentious.

Outgoing TTC chief executive officer Andy Byford said as much to the Globe and Mail in a December 2017 interview, noting that if the cost ballooned beyond the $3.56 billion, the debate about whether to extend the subway at all would need to be re-opened -- something Tory has vowed will never happen.

Breaking that budget, Byford told the Globe, “definitely should then re-open the debate about should there be a timeout, should we look again at the alternative, which would be an LRT.”

The staff report noted that $3.35 billion was for hard construction costs only, and did not include necessary costs to finance the project or contingency funds.

But while several additional costs were listed later in the report, they were not tallied in the overall cost presented to council. City staff did not tell councillors that accounting for those costs would put the project at $3.9 billion.

City officials suggested on the floor of council in March 2017 that the subway could still come in below budget.

When asked about what funds were still available for the promised Eglinton East LRT, city manager Peter Wallace replied: “If the cost of the subway comes in lower than the original cost of the $3.56 (billion), there will obviously be residual funding available.”

City spokesperson Brad Ross said the estimate reported in March 2017 was “validated by the TTC for reporting purposes.”

“It is not unusual for drafts to be developed, reviewed and then revised upon review,” Ross wrote in an email to the Star.

Keesmaat, in her response to the Stars questions for this and an earlier story, did not address specific questions about the $4-billion totals.

When asked about the estimates at or over $4 billion, TTC spokesperson Stuart Green referred to the costs spelled out in the March 2017 report. He described everything apart from $3.2 billion for construction and $110 million for financing as optional.

For example, additional costs of $305 million stated in both the internal records and March 2017 report are for contingency funds in case of schedule delays or construction cost overruns. The staff report says such allowances had been recommended by two external consultants.

“City staff are expected to be as clear as possible when councillors are making multi-billion-dollar decisions,” said Councillor Josh Matlow, who has pushed for a value-for-money comparison of the subway and LRT plans.

“For some reason, a choice was made to bury the costs. The public was misled. Why? Torontonians deserve answers and, even more importantly, an honest transit plan that supports our quality of life rather than political campaigns.”

Last week, the Ford government announced plans to radically change four lines being planned by the city, including the subway in Scarborough. The province would return the line to the three-stop version boosted by Premier Doug Ford’s late brother and the former mayor Rob Ford in 2013. That plan was last estimated to cost $4.6 billion in 2016, with work stopping after council decided to move forward with the one-stop plan.

The Star earlier reported that Tory and Keesmaat promised council a two-for-one deal when they said both the one-stop subway extension and a multi-stop LRT along Eglinton Ave. East could be built within the same $3.56-billion funding envelope. Today, the Eglinton East LRT remains completely unfunded.

The seven-stop LRT would have been fully funded by the province to replaced the aging Scarborough RT, running in its own corridor from Kennedy station to the Scarborough Town Centre and north to Sheppard Ave. It was estimated to be completed by 2019 when the plan was scrapped by city council during the Ford administration.