London's rapid transit project faces $174M cost overrun

It’s one of the most loved and loathed projects the City of London has ever undertaken — and now the bus rapid transit (BRT) project is about to become even more controversial.

“It was never an easy sell to taxpayers,” conceded City Budget Chair, Coun. Elizabeth Peloza.

She added, “Some people just don’t use transit, never pictured themselves using it. But we also have Londoners who rely on transit every day for basic needs, and also a lot of people coming from other municipalities who have a really good transit system, and they’re wondering ‘London where are you?’”

City councillors are being asked to cover a $174.2 million budget overrun on the rapid transit project. Peloza said she’s not surprised.

“We knew it was coming…just this is a large number,” she said.

According to Jennie Dann, the city’s director of construction and infrastructure, pre-pandemic pricing models didn’t age well.

“This budget request reflects a number of factors that have been impacting all construction projects, such as inflation, rising interest costs and construction costs,” she explained. “We’ve seen supply chain issues continuing, new legislation. As well, we’re also dealing with the changing real estate market that’s had a big impact on the project’s original budget.”

The multi-million dollar ask leaves council in an unenviable position. The BRT project is now half finished, and funding from senior governments could be in jeopardy if it doesn’t proceed.

The Downtown Loop, East London Link, and the Wellington Gateway have all been approved for funding under the Canada Infrastructure Program.

Dann said of the $174.2 million, $148.9 million — or 85.5 per cent — is covered by development charges. City staff proposes the remaining $23.9 million be debt financed over a number of years, with the impact to taxpayers $4.8 million in this budget cycle.

“There’s $167 million in funding from our federal and provincial partners, and that could be at risk if London doesn’t deliver on the higher order of transit infrastructure that we’ve committed to,” said Dann. “The risks of not approving this budget. There’s financial, social and economic risks, and Londoners could be on the hook for the sunk costs to date.”

The overall draft budget calls for a 5.4 per cent tax hike in 2024.

Public consultations on the budget take place throughout January, with final approval expected in March.