10-11-2014, 12:18 PM
LRT cancellation costs becoming more clear
October 10, 2014 | Paige Desmond | Waterloo Region Record | Link
October 10, 2014 | Paige Desmond | Waterloo Region Record | Link
Quote:WATERLOO REGION — Nearly half the $250 million expected to be spent on light rail by year's end wouldn't be included in cancellation costs owed to construction consortium GrandLinq if a new council cancelled the project.
About $86 million for items, including land purchases, early works and infrastructure and consulting costs, is not part of a project agreement with the consortium.
"All these other costs, in my view at least, are legitimately LRT, basically throwaway costs if the project were to be cancelled, which doesn't look like it's a likelihood," said Coun. Tom Galloway.
An additional $27 million has been spent on Bombardier light rail vehicles as of Aug. 31, also not part of the contract, which would bring the estimate of money owing to GrandLinq for work completed down to about $137 million.
About $818 million has been budgeted for light rail construction. With design, finance, operations and maintenance tied in for 30 years, the total project is estimated to cost at least $1.9 billion.
There are provisions built into a massive project agreement between the region and GrandLinq that detail how costs would be settled if the region cancelled the project or if either party defaulted. There are no set values but rather rules guiding how the process would play out.
According to the project agreement, if the region chose to cancel light rail, the main cost would be a termination sum calculated based on several factors.
It would include subcontractor losses, reasonable costs to GrandLinq to wind up its operations and employee termination payments. There could also be legal and financial consulting costs to the region if the two sides disagreed on the final sum.
The region is entitled to terminate the contract for any reason at any time with 180 days' notice to GrandLinq.
Some candidates in the Oct. 27 municipal election suggest scrapping light rail in favour of buses.
The provincial and federal governments could take away their funding and may not be willing to instead put it toward an expanded bus system, Galloway said, though that isn't certain.
"There would be a fairly large likelihood they would do their bit on the funding, but I'm not sure that can be taken as a given," he said.
The province has committed up to $300 million to help build the project and the federal government committed up to $265 million.
Regional staff said at a committee meeting in September that if that happened, buses would likely run the same route planned for light rail from Conestoga Mall in Waterloo to Fairview Park mall in Kitchener.