Ottawa's transit troubles force rethink of LRT's financial plans

Ottawacitizen.com
Nov. 9, 2015
By David Reevely

Prospects are dimming for a rail link to the airport and an eastern line that goes all the way to Trim Road, as the city struggles to afford the rapid-transit lines it’s already planning. Indeed, the four-year old plan to cover the city’s light-rail costs turns out to be based on some faulty assumptions about ridership and payments from other governments.

You wouldn’t have known it from all the handshakes and sunny speeches on Monday morning at Lincoln Fields, where a bunch of councillors and MPPs gathered to announce the province is giving the city $34.3 million this year - Ottawa’s share of an annual provincial distribution of money Ontario brings in by taxing gasoline. The money, dedicated to transit, is helping to pay for construction right now on the light-rail tunnel under downtown and laying track toward an eastern terminal at Blair Road.

The politicians rhapsodized.

“All this work in enhancing our public transit is going to result further in building a world-class capital city which is our hometown,” said Ottawa Centre MPP Yasir Naqvi.

“Ontario’s gas tax is helping ease traffic congestion and reduce air pollution in Ottawa by getting more people out of their cars and onto the bus,” said transit commission chairman and Cumberland Coun. Stephen Blais.

It sounds like a lot of money and it is. It’s just not as much as the city had been counting on from a permanent program whose transfers are fully accounted for already in the city budget. For the second year running, the payment is short of the $36 million Ottawa has assumed it would get.

The shortage is the second whammy for a budget already hit by lower-than-expected ridership. They’re really the same problem: the gas-tax payment is determined by a formula built on ridership numbers.

“Population growth wasn’t what it was anticipated to be. Housing development wasn’t what it was anticipated to be. The economy has not recovered to the same high levels that people had hoped for,” said Blais. “All those things factor into how much revenue is collected by the city, including by OC Transpo. That impacts the formula by which a lot of our future planning is based. The city manager says he’s working on an update to the affordability model for light rail.”

The “affordability model” is the plan for how the city will cover its share of rail construction over the next several decades, a rolling scheme of taxes and debt and transfers from above covering $1.9 billion and counting. It was written in 2011, using what turned out to be unrealistically high ridership and gas-tax revenues.

The rail plan underwritten by that financial model includes light-rail lines between Bayshore, Baseline and Place d’Orleans, and an extension of the existing O-Train line so it would run from Bayview to Bowesville in Riverside South.

Lots of people want the leg planned for Place d’Orléans to extend a few more kilometres to Trim Road and serve more of Orleans. An O-Train spur to the airport would be nice for travellers and would make Ottawa feel like a more grown-up city. Each would cost about $160 million, according to the city’s estimates.

The model was meant to be conservative, so it isn’t in chaos. But neither is it full of pleasant surprises.

Ottawa West-Nepean MPP Bob Chiarelli, the province’s senior local minister, said he’d want to see “an ask” for the Orléans and airport money, a detailed case; thus far the talk about those extensions is just chatter. Both the provincial and federal governments are looking to spend great vats of money on infrastructure and it’s not beyond imagining they could just get together and pay for something the City of Ottawa can’t find the money for. But a good ask comes with a spending promise of your own.

Thursday, the first public draft of the city’s 2016 budget comes out. In September, OC Transpo revealed it was running an $11.5-million deficit this year and was cutting to try to get that under control. Everyone’s short of money, Blais said, and that means everyone, including OC Transpo, must be cautious about their plans.

Construction projects that would be at least five years away aren’t the same as operating shortfalls this year, but they’re part of the same package. It’s hard to see how caution can square with going hundreds of millions of dollars deeper into a wish list when it’s not clear we can afford the things we’re already planning to buy.