Ontario government says it will not cover $85M shortfall for beleaguered Spadina subway extension

Nationalpost.com
March 30, 2015
By Natalie Alcoba

Ontario government officials say it will not cover an $85-million shortfall for the beleaguered $2.78-billion Spadina subway extension.

That means the City of Toronto will be on the hook for another $51-million - in addition to the $90-million already being requested of it to help cover a $150-million budget increase for the delayed project, according to a report written by city manager Joe Pennachetti. As part of a cost sharing arrangement, York Region has also been tapped to cover $60-million in cost overruns.

Mr. Pennachetti says the $85-million shortfall stems from a trust fund set up by the provincial government. It put $870-million into the fund, and projected interest earnings of 4%, for a total original project commitment of $1.059-billion, according to Mr. Pennachetti. But it never made the money anticipated.

Mr. Pennachetti wants council to ask the province to cover that amount. But provincial officials quickly shot down that idea.

In a statement, transportation minister Steven Del Duca said the Trust “was never obligated to offset or make up the shortfall in its original projections.” He blamed the anticipated shortfall on a “return on investment [that] has been lower than hoped, as a result of the 2008 global market collapse and recession.”

In a follow up email, his spokesman said the Ontario government’s commitment remains $870-million. It is putting up the most cash. The federal government has contributed $697-million while Toronto, before the cost over runs, approved $526-million and York Region $352-million.

“We have every expectation that the TTC will complete this project in its entirety as per the plan and the agreement, as expeditiously as it can,” the minister stated.

The cost of the $2.6-billion six line has increased to $2.78-billion, not including the cost of settling claims by contractors. It is also further delayed, and will not open until the end of 2017.