Derailment at City Hall
TThe past few weeks have not been good ones for City Council. CBC reporter Joanne Chianello has been breaking stories about Stage 2 of LRT, and it does not reflect well on our elected representatives.
The issue is much larger than whether the City will get the keys to the new LRT this Friday or not. The mayor has been quiet on that point with only days to go.
Signs of trouble came months ago when taxpayers were told it would cost an additional $1.6 billion to complete the second stage of Ottawa’s Light Rail Transit project. When asked what the financial impact of an extra $1.6 billion would do to the City’s Transit plan and taxpayers, there was no substantial answer, only that the City would borrow $1.2 billion to cover the costs. When the City Treasurer, Marian Simulik was asked what the lifetime borrowing costs were estimated to be to finance Stage 2, she insisted she could not provide an answer even though she was able to say what the rates would be when the debenture was issued.
On the same day, LRT Stage 2 was approved, the 2019 budget was passed with an increase in transit taxes and fares to accommodate the increased project cost. It is an open question whether the City can afford Stage 2 after the Provincial Conservatives eliminated the doubling of the provincial Gas Tax transfer, a key revenue source that was earmarked to pay for LRT. Something we should hear about this fall.
When Councillor’s asked direct questions, such as, what was the technical score of the winning bidder, Senior City Staff said they could not divulge that information.
Councillors continued to ask direct questions, and staff continued to refuse to answer, citing that delegated authority had been granted, and that staff were simply following Council instruction. Staff warned Council that there was no time to delay, that it would jeopardize the timeline and the project itself. Council needed to make a decision.
Council did vote on a motion to defer the decision for two weeks to better understand the implications of approving the $4.6 billion project, but that failed in a vote of 16 to 6.
A number like $4.6 billion is difficult to comprehend. It is a very big number. If you were to give away $100,000 each and every day, 365 days of the year you would only get rid of $36.5 million a year. Continuing for 125 years you would not use the entire $4.6 Billion!
When billions are at play Council needs the best and most reliable information and advice it can get before making decisions. At the same time, the contract bidding process rightly demands confidentiality of commercially sensitive information. What is becoming clear is that Councillors don’t always have sufficient information, clarity on the contracting process or time to understand what is before them for decision .
Fast forward to the present day. Many of the questions asked by Councillors have come out, not because City Staff decided to release the information, but because the CBC published the information.
It has been widely reported that SNC failed not one, but four of the criteria necessary to win the contract and that SNC was given multiple chances to revise their bid.
Providing opportunities for revision is not necessarily bad. In fact, it is within the norms of good contracting practice. However, the Ottawa Citizen reported that the lawyer hired by the City also provides services to SNC. This doesn’t pass the sniff test.
Unfortunately this story appears to be far from over.
Despite all the benefits that can come from this project the rising debt load raises serious questions about the financial well being of the City that need to be asked and answered. Ratepayers should be concerned.