Who will pay life-cycle costs for Hamilton’s LRT ‘to be determined’ says LiUNA exec

An artists rendering of Hamilton's LRT project. The federal and provincial governments have offered $3.4 billion to build the 14 kilometre line. Metrolinx

The head of the Labourers’ International Union of North America (LiUNA) believes the prospect of a Hamilton’s LRT is “very close to the finish line” but says the outstanding question is who will pay for life-cycle costs after it’s up and running.

Joe Mancinelli, LiUNA’s vice-president and regional manager for Central and Eastern Canada, says in recent talks the federal government appears ready to at least match the province’s $1.3-billion commitment to the project and perhaps commit more.

“Minister McKenna said that she’d be willing to put even a little more than that but wants the province, of course, to match whatever she puts in as well,” Mancinelli told Global News.

Ontario has pitched the light rapid transit (LRT) project as one of five priority Greater Toronto Hamilton Area (GTHA) transit projects to Canada’s Minister of Infrastructure Catherine McKenna for funding.

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The decision to move forward with the project was based on a technical analysis from the five-member Hamilton Transportation Task Force which recommended the resurrection of the LRT – cancelled by the Ford government in late 2019.

In August, Mancinelli and LiUNA pitched a $3.4-million LRT construction plan that would combine private money with potential contributions from the provincial and federal governments.

Assuming the two governments pitch in $2.6 billion, Mancinelli estimates another $900 million would have to come from the private sector with a return on investment over a 30 year period.

On top of that, he says two more significant issues need to be clarified: the bidding process for the line’s construction and who will pay for life-cycle costs of the LRT.

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We don’t put our money in there for nothing for 30 years. We need a return,” said Mancinelli. “And so who pays that? Is it the city? Is it the province? So that needs to be determined.”

Last month, transportation minister Caroline Mulroney told Global News a nine-kilometre route from McMaster to Gage Avenue was proposed to the Trudeau government with the option of an 11-kilometre run from McMaster to Queenston Road and a 14-kilometre route from McMaster to Eastgate, if more federal funding can be secured.

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“The ultimate alignment will depend on the support that we get from our partners,” said Mulroney.

The minister said the province could engage commercial partners and the city, but said a long-term relationship with the federal government is of paramount importance.

Mancinelli said his dream project would be a line that stretches from Stoney Creek to Dundas but said that would likely cost an additional $1 billion tacked on to the estimated $3.5 billion being discussed.

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“So that could be a second or third phase of the LRT,” Mancinelli said.

“So what we’re looking at right now is a three-point, whatever to be determined, billion-dollar project that would be definitely the entire length from from McMaster University all the way down to Stoney Creek.”

In February, McKenna said she was very much on board with supporting a Hamilton LRT project and pleased to see the province step up and put a plan on the table.

“It’s good to see the province of Ontario finally back at the table to discuss Hamilton’s LRT project,” McKenna told Global News in a statement.

“We’ve been encouraging them for months to come up with a serious plan. We’re not there yet, but we remain committed to working with the city, the province, LiUNA and other partners to get the public transit Hamiltonians deserve.”

Mancinelli says in discussions he’s been privy to, through LiUNA’s infrastructure arm Fengate Capital, the minister is looking at possibly increasing the federal government’s contribution to $1.4 billion with the expectation of a similar contribution from the Ford government to reduce the reliance on contributions from the private sector.

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“Getting to $2.8 billion makes the private sector contribution much less, which means the interest payments over the next 30 years are less,” Mancinelli said.

“So that’s the kind of thinking that’s going on right now and it’s just managing the financial packages is where we’re at right now.”

Another potential hurdle for the project may be Hamilton’s city council, as councillors on Wednesday voted on a motion to bring Metrolinx to the table for an update on the project.

Mayor Fred Eisenberger told the general issues committee that a letter had been drafted and sent to Ontario’s transit agency “a couple of days ago” requesting either transportation minister Caroline Mulroney or a spokesperson from Metrolinx to appear and explain what discussions are happening around a prospective LRT project.

Ward 15 Coun. Judi Partridge said it’s ‘almost embarrassing” that discussions are going on outside of council with a project that will impact the city’s residents.

“They’re out there negotiating on behalf of council it appears, which I find very embarrassing, to fund a project we’ve had literally no input in,” Partridge told the committee.

City manager Janette Smith said she has reached out to the MTO several times to inquire about the “next steps” but has not received any details as of Wednesday.

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Ward 9 Coun. Brad Clark said it was frustrating “not being at the table” and didn’t understand what LiUNA was doing, suggesting the project was supposed to be a request for proposal (RFP) process.

Eisenberger explained that the lack of information was “overtly’ caused by the province’s 2019 cancellation which led to the removal of staff tied to procuring an LRT project.

“The conversations have been stilted by virtue of the fact we don’t have anybody that’s in the know consistently talking with the federal and provincial government other than the city manager and myself,” Eisenberger said.

Mancinelli acknowledges that the project will ultimately need a yes from the city to move forward once funding is in place. So far, he says interactions between development teams, the mayor and city staff have been “responsive.”

The LiUNA chief admits that operating costs will be a question since city taxpayers have “no appetite” to absorb those costs and the interest that would need to be paid to partners.

He says the city’s current budget for maintaining transit, which is around $8 million a year, is far below the estimated $40 million required in life-cycle costs and that there will have to be funding for that from the provincial government.

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Mancinelli suggests a potential solution is to raise those funds through fees tied to future development along the LRT.

“I know that there’s been other municipalities, in Montreal or in Edmonton where they are building LRTs, where the municipality has raised funds for those life-cycle costs through development fees for the development along the LRT so that taxpayers aren’t paying for it,” Mancinelli said.

Mayor Eisenberger told Global News that the $40 million dollar estimate is “way off the rails” and suggests the costs are more in the range of five to six million annually based on operating costs incurred by Kitchener-Waterloo’s 14 kilometre LRT line.

“It’s been on in all the reports and all the documentation that we’ve been provided, you know, right from the beginning of this project,” said Eisenberger.

“So this is not a deal breaker in any way, shape or form.”




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