Uncertainty lingers over expenses racked up during LRT delay
Questions linger about how insulated municipal taxpayers are against extra costs related to the LRT delay.
Hints of uncertainty were sprinkled through a finance and economic development committee meeting this week as city managers tried to assure politicians that the $2.1-billion fixed-price contract was virtually bulletproof.
For some councillors, one of the most surprising facts revealed by city lawyers on Tuesday is that there is no detailed language about what municipal costs the Rideau Transit Group will be cover during the delay period.
Councillors heard there is no specific clause in the agreement that perfectly responds to the city’s extra costs in the event of a missed handover date. The contract framework will sort it all out, lawyers assured politicians.
Part of that framework is a process the city and RTG have agreed to use to settle disputes, but if the two sides can’t agree on the costs through negotiations between senior officials, mediation or arbitration, there’s a chance the disagreements could end up in the courts.
The city expects to take possession of the Confederation Line LRT on Nov. 2, a delay of more than five months from the May 24 handover date written into the contract with RTG. Under the contract, the builder is allowed to push the handover date without paying a cash penalty to the city.
That means the city will continue running a high-capacity bus system through the downtown core between June and November. OC Transpo will continue to pay drivers, buy fuel and cover any bus repairs related to that service. For those drivers who transitioned to LRT operations, their training will last several months longer than anticipated.
Everything comes with a price.
Mayor Jim Watson seems confident RTG will be responsible for all of the city’s delay-related expenses, but some of this council colleagues are skeptical.
“Is this going to cost us a whole lot more money or not?” Gloucester-Southgate Coun. Diane Deans said on Wednesday.
Deans still can’t believe the city can’t use a $1-million penalty clause against RTG for not meeting the contracted handover date.
“Once burned, twice shy,” Deans said.
“When I hear the same people suggesting RTG will cover the city’s additional costs, I just want to know what the contract says.”