City says it expects to recoup all LRT delay costs from developers

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Ottawa taxpayers won’t be on the hook for an estimated $34.4 million in costs related to the delayed opening of phase one LRT – assuming the city can get the light-rail builder to pay, according to a memo sent by city staff Thursday.

Deputy city treasurer Isabelle Jasmin wrote that the costs related to light-rail transit delays will be outweighed by penalties and interest charged to developer Rideau Transit Group.

As a result of more than a year in delays, Jasmin said that Ottawa has incurred additional net costs of roughly $34.4 million. Reported figures only include estimates up until the end of June; additional costs will be added when RTG provides an official handover date, currently slated for mid-August.

Cost estimates include $62.5 million to extend bus operations in lieu of light-rail service and an additional $28.9 million to handle route detours. These prices are offset by savings on maintenance and debt payments not made to RTG while construction continues, including $4.8 million saved in interest on capital funds not issued.

Based on terms and conditions of the original contract signed with the developer, the city expects to recoup $32 million from RTG to account for ongoing lane closures related to the LRT development. RTG will also be charged three $1-million penalties for missing promised handover dates in May and November of 2018 as well as this past March. City officials had suggested previously that RTG would not be penalized for missing the initial May 24, 2018 handover date as the developer was entitled to ask for an extension.

If paid, the total $35 million in penalties would fully offset the net costs of the delay and result in a $600,000 windfall for the city.