City File: Taking the Wheel

Eleventh-hour push to have HSR operate Hamilton’s LRT comes with big risks

By Ryan McGreal

Posted September 01, 2017 in Essays (Last Updated None)

Just when you thought it was safe to take a breath, a new kerfuffle over Hamilton's tumultuous Light Rail Transit (LRT) project threatens to push back the implementation deadline and turn LRT into a political football during next year's Provincial election.

The LRT project survived an existential crisis this spring when City Council approved a mandatory Environmental Project Report (EPR) Addendum after months of tumult. The City submitted the EPR Addendum to the Provincial Ministry of Environment and Climate Change, which must review transit project to ensure that any negative environmental impacts are mitigated. The Ministry signed approved EPR Addendum on August 2.

That approval freed up Metrolinx, the Crown agency overseeing the LRT project, to proceed with a Request for Proposals (RFP) to invite a shortlist of qualified transit companies to submit bids to Design, Build, Finance, Operate and Maintain (DBFOM) the LRT system in Hamilton.

This DBFOM contract is the standard Metrolinx procurement model. Metrolinx will own the system, but the company that wins the contract will build the system and then operate and maintain it during the contract period, likely 30 years. Unlike some other public-private partnership (P3) models, this provides a powerful incentive for the consortium to build the system properly, since cutting corners makes operation and maintenance more difficult. Including operations and maintenance in the contract also allows the winning consortium to offer a more competitive capital cost commitment.

Timing is crucial: the goal is to have a contract signed before the next provincial election in June 2018 so that it will be difficult for whichever party forms the next government to cancel the project. But this is Hamilton, and nothing is ever simple or straightforward. As soon as Council finalized its EPR Addendum vote, the union that represents HSR transit employees began calling on the City and Province to ensure that LRT is also operated and maintained by HSR employees.

Amalgamated Transit Union (ATU) Local 107 launched a "Keep Transit Public" campaign, complete with a website and petition that accuses the province of "privatizing" public transit through the Metrolinx procurement model. The union is opposed in principle to contracting out LRT construction, but their main issue in this campaign is the operation and maintenance piece of the contract.

Ward 3 Councillor Matthew Green took up the mantle of leadership on behalf of the union, and Council voted on August 18, 2017 to tell the Province that they want the HSR to operate and maintain the LRT line. Now it is up to the Province to respond to this latest request from the City - a city, we must recall, that is contributing nothing toward the capital cost of the line.

Metrolinx already issued its Request for Qualifications (RFQ) back in February based on the DBFOM procurement model, and the interested parties that have been qualified and approved to submit bids on the contract itself did so based on building and operating the system. If the Province decides to play ball and pull operation and/or maintenance out of the project, Metrolinx will have to start over and issue a new RFQ, followed by a new RFP. It is extremely unlikely that a contract will be signed before the next Provincial election.

While every provincial party is on record supporting Hamilton LRT, the Progressive Conservatives are at best lukewarm in their support and some local members - like Ward 7 Councillor Donna Skelly - are aggressively opposed. If the Tories win the June 2018 election and form the next Provincial government, it would be dead-easy for PC leader Patrick Brown to kill the project as a cost-cutting measure if the contract is not already locked in. And while a lot can happen over the next ten months, right now Brown is considered the front-runner to become our next Premier.

It's significant that many of the Council votes in favour of the motion came from councillors who are opposed to, or at least ambivalent about, the LRT line itself. They recognize that a decision to restart the process is the best chance to kill a project that is otherwise close to the point of no return.

The question of who should operate and maintain LRT is an important policy issue. There are good reasons to have LRT and local transit operated by the same organization. (On the other hand, there are also good reasons to erect a robust policy firewall between LRT and City Council, which has a dismal three-decade track record of under-funding and mismanaging public transit.)

But the best time to argue for a different decision on how to procure and operate the system was two years ago, before Council signed the Memorandum of Agreement with Metrolinx that spelled out the current procurement model.

It's an open question how the Queen's Park will respond. They eager to see this project go ahead and they certainly understand the risk of delay. Metrolinx can simply reject the request and proceed with the RFP as planned. But doing that risks driving a wedge between the governing party and the unions, which tends to favour the Liberals against the risk of a labour-hostile Tory government.

Kudos to the ATU for some highly effective pressure politics on this file. Since the union does not have a position on LRT itself, they can maintain a clear, narrow focus on their interest in having public employees operate whatever system gets built (the operators will almost certainly be unionized either way). I just hope that their high-stakes gamble doesn't end up getting the LRT project killed along the way.

First published in Hamilton Magazine, late summer 2017 edition.