Cost of building LRT is spiking across Canada. Should Hamilton be worried?
Waterloo Region residents must have felt serious sticker shock this month after learning the estimated cost to build an LRT extension from Kitchener to Cambridge has tripled to $4.5 billion.
That still-unfunded, proposed 17.5-kilometre extension of the existing ION light rail transit system to downtown Galt was publicly pegged at closer to $1.5 billion as recently as 2021.
The inflated price tag is causing a buzz in that region - but also local questions from Spec readers about the financial fate of Hamilton's own off-again, on-again LRT that has already been cancelled once over budget woes.
Fast-rising budgets for Canadian rapid transit projects are pretty much inevitable," suggested transit policy expert Matti Siemiatycki, who stressed Waterloo is not alone in seeing staggering" cost estimates.
The 18-kilometre first phase of Calgary's Green Line LRT is now expected to blow by its current $5.5-billion budget, while the projected cost of Toronto's 15-kilometre Ontario Line subway has spiked from an early estimate of about $11 billion to as much as $19 billion.
Transit-building costs were trending up long before COVID, noted the University of Toronto professor, but pandemic inflation (which peaked last year at 8.1 per cent), supply-chain woes and competition for contractors among several big projects has exacerbated the problem.
We don't know exactly what that means for Hamilton's LRT project because both Metrolinx and the province have declined requests for budget updates, citing the need to protect the eventual process for competitive bidding.
But we do know cost estimates have been adjusted at least three times since the project was resurrected in 2021 thanks to an auditor-general report update last year.
If you're an LRT fan, there is both good and bad news to be found in the latest update out of Waterloo Region.
For example, the latest project cost update comes as part of the region's effort to build a business case for provincial funding - which is not guaranteed.
Hamilton's resurrected project, by comparison, comes with joint federal-provincial funding of $3.4 billion. It also includes a written commitment that those project funders are responsible for cost-overruns," rather than the city, noted Mayor Andrea Horwath's office via email in response to Spectator questions about the risk of rising LRT costs.
The original $1.5-billion estimate for the LRT extension to Cambridge was also based on numbers gathered in 2018 or earlier, said Matthew O'Neil, Waterloo Region's manager of rapid transit co-ordination.
Since then, pandemic inflation, supply-chain disruptions and labour shortages have affected the cost of everything," he said in an interview this week. The market has changed, especially for public-private partnership procurement, in terms of how much it costs and what it costs to transfer risk (to private bidders)."
O'Neil added that the latest ION construction estimate also tries to account for future inflation, given construction is not expected before 2030.
Funding for Hamilton's LRT version 2.0 has already more than tripled.
Specifically, the federal Liberals and provincial Tories teamed up in the middle of the pandemic to resuscitate the previously cancelled LRT line with $3.4-billion for construction costs. The public cost estimate for the project when first approved in 2015 was $1 billion.
As late as February last year, Metrolinx official Kris Jacobson characterized that new budget as adequate - but also acknowledged the challenge of inflation, which would not peak until months later. We do factor it into our costing, but it is changing fairly rapidly these days and it's affecting the entire market," he said.
The agency was also examining the idea of splitting the multi-year project into smaller contracts in the hope of saving cash and reducing risk for bidders. A public update on procurement is expected to come to council in late May.
The proposed new ION extension to Cambridge also features some pricey challenges that did not exist for the original Kitchener-to-Waterloo LRT line that was built for under $900 million and opened in 2019.
Those include six new bridges and elevated sections of track needed to cross the Grand and Speed rivers as well as navigate some tricky highway crossings and steep hills. That will be a big cost component," O'Neil said.
Hamilton needs fewer major bridges, but does require a dedicated rail span across Highway 403, an underpass beneath a CP rail spur and a new or upgraded crossing of the Red Hill Creek valley.
Ironically, Hamilton's cancelled first attempt at LRT appears to have factored into the cautious budgeting for Waterloo Region's proposed ION extension.
O'Neil said he watched Hamilton's original project unfold and emphasized the region does not want to request government funding only to find itself short of cash to get the job done. That is a situation we very much want to avoid," he said.
Matthew Van Dongen is a transportation and environment reporter at The Spectator. mvandongen@thespec.com