LIUNA offers to partner in resurrected LRT project worth $3.5 billion

Construction union LIUNA has pitched itself to the government as a partner in a resurrected LRT project built with a $3.5-billion mix of public and private cash.

A high-level analysis done for the union explores a variety of options to pay the bill for light rail transit, including an infrastructure bank loan and $250 million in land development partnerships - potentially with LIUNA's pension arm - that could see condos built above stations and apartment towers spring up along the LRT corridor.

But $1.2-billion in contributions from each of the federal and provincial governments still represent the best bet" to make light rail a reality in Hamilton, said LIUNA vice-president Joe Mancinelli.

My hope is the feds and the province get together and figure out a way to get this done," he said Tuesday, arguing the prospect of pandemic stimulus funding means the timing just couldn't be better" for a federal contribution to the on-again, off-again LRT project.

LIUNA asked its investment arm, Fengate Capital, to review light rail building costs after the Progressive Conservative government killed Hamilton's LRT project in the middle of construction bidding last December, citing budget estimates that had ballooned from $3.6 billion to $5.5 billion.

An upset Mancinelli publicly questioned that claim, calling the LRT cancellation cowardly" and vowing to investigate." The results of that investigation ended up in a confidential unsolicited proposal" sent to the provincial Transportation Task Force studying how to spend $1 billion previously earmarked for the cancelled train.

(That task force, which included a LIUNA appointee, recommended in March that the province fund either light rail or bus rapid transit in Hamilton. The province said Tuesday those findings will likely be made public in the fall.)

The Fengate review assumes Hamilton's planned 14-kilometre LRT would cost about $3 billion to build, but differing financing and contract options peg total net present value" costs between $3.4 billion and $3.9 billion.

Mayor Fred Eisenberger said Tuesday LIUNA's assessment sounded not far removed" from the all-in budget of about $3.6 billion approved by the former Liberal government.

The Spectator was given a summary of the review, but does not have access to Fengate's background research. The summary gives high-level estimates for theoretical cost-covering scenarios. Highlights include:

• $250 million in private construction cash in return for land development along the route;

• a low-interest loan of up to $1.1 billion from the Canada Infrastructure Bank;

• raising construction cash by giving investors a slice of fare-box revenue over 30 years;

• federal and provincial funding of $1.2 billion each;

• Year 1" operating and maintenance costs at $23.9 million.

Mancinelli said he commissioned the research by Fengate - which has a history of involvement in major public-private projects like hospitals - in part to dispute the provincial LRT cost estimates that he argued are unfairly inflated."

But he said LIUNA is also very interested" in either joining a future consortium bidding on a resurrected LRT, or approaching the winning bidder to talk about building partnerships along the route.

That's a sensitive topic for advocates who want surplus LRT lands dedicated to affordable housing. Many have already expressed anger about developers gentrifying" the transit route, pushing out low-income renters.

Mancinelli said LIUNA's involvement would not preclude new affordable housing and the union-developer would be open to building new rental apartments on the route. You get more housing, and we get a long-term return."

The LIUNA vice president said he has forwarded the research to Federal Infrastructure Minister Catherine McKenna and discussed the options with Premier Doug Ford, adding he seems to have a renewed interest" in the project.

Ford's spokesperson did not reply to a request for comment Tuesday. But the province has previously said its contribution is capped at $1 billion and Ford predicted earlier this month that resurrecting LRT would result in a massive tax increase" for Hamilton residents.

McKenna has called LRT Hamilton's only shovel-ready" transit project with pandemic stimulus funding looming. She told The Spectator earlier this month the government is open" to considering a LRT funding request.

Despite the review's findings, Mancinelli clarified LIUNA is not interested in pursuing a slice of LRT fare-box revenue in exchange for upfront construction funding. I think that is revenue the city will need for operations," he said.

The province says it would have cost the city $1 billion to run the cancelled LRT - part of an overall $5.5-billion project estimate that is still largely confidential.

The Fengate review focused on building costs, but included a Year 1" annual operating and maintenance payment of $23.9 million for the private design-build-operate scenario. No explanation of that figure was available Tuesday.

Several city councillors have vowed to oppose LRT if it is put back on the table, citing fears of a tax increase and cost overruns.

Matthew Van Dongen is a Hamilton-based reporter covering transportation for The Spectator. Reach him via email: mvandongen@thespec.com