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Crunching the numbers on LRT

In the wake of the cancellation of the Hamilton LRT project, supporters of Light rail are questioning how the government came up with a $5.5 Billion dollar price tag when until recently it was thought that $1 Billion would cover the cost. According to Transport Minister Caroline Mulroney, Premier Doug Ford and Flamborough-Glanbrook MPP Donna Skelly, the nasty surprise came about as a result of a review of the Hamilton LRT file from the Wynne era, that showed actual construction cost estimates had already ballooned before the election, something the previous government had known, but not disclosed. The current government knew something was wrong when the three shortlisted bidders refused to submit bids by last year’s deadline, necessitating a re-bidding of the project. While that process was underway Mulroney ordered a so-called “shadow bid” be conducted by an independent transportation consultant to give the government a truer picture of what the cost would end up being.

Critics are complaining that to arrive at the $5.5 Billion figure the government is adding in so-called “lifecycle” costs that were not part of the $1 Billion. This is true. But even if you remove roughly $1 Billion in interest charges over 30 years and another $1Billion in operating and maintenance fees that Hamilton would pay, the net cost of building the project is still $3.5 Billion –more than triple the amount both the Wynne government and the current government had said was the limit of any provincial contribution.

Besides the $1 Billion in interest charges are a real cost—not directly to Hamilton, but to the province—and as politicians like to say, there is only one taxpayer. As for the operating and maintenance costs of another $1 Billion—see below.

Hamilton transit costs would have soared.

Speaking of the $1 Billion operating and maintenance costs. From the beginning, this cost was to be the responsibility of Hamilton taxpayers. Over the 30 year life cycle of the project it would have meant Hamilton paying over $30 Million a year to support LRT alone. Currently Hamilton taxpayers subsidize the HSR to the tune of $36 Million a year (2013) so the LRT operation and maintenance agreement would nearly double transit costs with the addition of  LRT to the system. The Bay of Observer is surveying councillors to see if they would have supported an operating and maintenance agreement that would result in such an increase in transit subsidy, and while rtesults are incomplete, three councillors–Clark, Whitehead and Partridge told the Bay Observer they would have voted to kill the project at that point. Said Clr. Judi Partridge, “My biggest concern all along was what the operating and maintenance costs of this project were going to be and who was going to pay for it. At every meeting a few of us asked when was Council going to see what the actual costs are. No one could or would confirm even what the actual fare price to ride the train was going to be. The assumption was that the ticket cost would be similar to the HSR fare. Based on what????  I also found staff working on the LRT project for the city continually providing general evasive answers to Council.  Staff reports lacked substance and glossed over important details.  I was left with not much confidence in the quality of the work.  On more than one occasion Councillors asked staff to ensure Metrolinx staff were present at committee meetings to provide council with answers to important questions. Even then, staff made the arbitrary decision that Metrolinx staff didn’t need to attend.”

John Best

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