Cost for Edmonton Capital Line LRT south extension balloons by $242 million, council approves in secret

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Edmonton will spend at least $240 million more than expected to extend the Capital Line LRT southward after city council approved the increase last month without public debate.

The Century Park to Ellerslie Road LRT extension will cost $1.34 billion, an increase the city attributes to inflationary pressures despite council agreeing to scale back elements of the project last year to save money. The 4.5 kilometre extension includes new stations in Twin Brooks and Heritage Valley.

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New costs are revealed in a borrowing bylaw on the agenda for Tuesday’s city council meeting, a formality that will allow the municipality to borrow money to pay for a project city council has already approved.

“Economic challenges, inflation, supply chain disruptions and labour availability significantly impacted the construction market and costs. To alleviate funding shortfalls, the project team has worked closely with the preferred bidder over the past two months to reduce costs, while maintaining the project benefits in the business case,” a staff report attached to the borrowing bylaw states.

“However, inflationary pressures, risk and market volatility have resulted in a remaining budget shortfall of $242 million.”

The city announced in April it selected Capital Line Design-Builders as the preferred bidder, a consortium comprised of Aecon, AECOM, and Ledcor.

What work the builder is required to do was already scaled back to save money last May in order to keep the project within the budget of $1.08 billion.

The Heritage Valley station was to be built on ground level instead of above grade, fewer LRT vehicles were to be ordered, and plans to add 800 stalls to the 1,100-space park and ride were to be cancelled. The storage garage would have 40 vehicles instead of 50 and deferring the cost of a new maintenance facility were changes city administration said would keep costs within budget.

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What, if any, other changes to the original plans were made is unclear.

Meeting minutes for a special council meeting May 22 show council agreed to increase the budget for an undisclosed infrastructure project by an unspecified amount.  Councillors Sarah Hamilton, Tim Cartmell, Jennifer Rice and Karen Principe opposed.

But documents accompanying the borrowing bylaw offer some insight. They show council approved increasing the budget at the May 22 meeting, raising the total costs to $1.34 billion from a more recent budget of $1.10 billion.

Edmonton will need to take on $179 million in new debt to pay for the project, for a total of $584.6 million in debt paid back through tax dollars over time. The other $63 million debt is being moved from unused money borrowed to build the Valley Line Southeast LRT.

Inflationary pressures

Mayor Amarjeet Sohi said the higher price should not be seen as a “cost overrun.”

“This is actually because of inflationary pressures,” he told Postmedia on Monday. “This is what the actual price of building this project is in today’s dollars.”

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The LRT extension, the mayor said, is an important project that will give Edmontonians — particularly in the south side where the population is growing quickly — more ways to get around the city.

Not going ahead would risk the city losing funding from other orders of government. As well, the city has already spent about $70 million in work preparing for LRT construction, Sohi said.

“The traffic gridlock that we experienced coming out of south Edmonton, we need to relieve that,” Sohi said. “A lot of money is coming to build this project from the federal and provincial governments and not moving forward on this project greatly risks their money not coming to the city and going somewhere else.”

About 55 per cent of the total is funded by other orders of government.

Federal, provincial and municipal governments originally agreed to pay $394.2 million, $300 million, and $333 million, respectively. Edmonton’s portion was to be covered with a 1.02 per cent tax increase between 2022-2027, approved by the former city council in June 2021.

The city is hoping to access more funding so the extra debt won’t be needed.

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Details kept private

Asked about the privacy around the increase, Sohi said council will debate the borrowing bylaw in public. He said it’s important discussions about procurement stay private so the city can get the best price.

“The only reason that we had that in-camera discussion was because we were in the middle of negotiation with the contractor to sign the deal.”

City council typically does not vote against borrowing bylaws. These bylaws are procedural, put on the agenda to fund projects council has already approved.

Coun. Erin Rutherford voted in favour of increase but against keeping details about the project in private.

Rutherford said she and other councillors went back and forth between approving the increase, and not, but she ultimately she thought it was the right decision.

“Ultimately, we need to keep building our city, and these are the costs of these kinds of projects,” she said. “To stop it, we walk away from millions and millions of dollars from other orders of government.”

But Rutherford said she is frustrated she’s not able to say more about what will happen with the Capital Line LRT extension because her colleagues voted to keep those details out of the public eye.

“I think when you’re spending that kind of money, taxpayer dollars, the public has the right to know,” she said. “It’s an honest conversation we need to have with Edmontonians about this and what information we’re receiving that is guiding our decision-making.

“There’s no reason once the contract is signed with the preferred bidder that this needs to stay in private. I’m still gonna push on that with the bylaw when it comes back.”

According to Rutherford all the bids received for the extension were above the amount the city had budgeted.

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