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Is it possible councillors didn't know the costs of cancelling the Scarborough LRT?

By: Metro Canada Published on Fri Feb 06 2015

With the Scarborough subway extension project finally moving forward, city councillors now have to deal with the other half of their 2013 subway-supporting decision: a bill somewhere in the neighbourhood of $85 million that’ll be paid to Metrolinx to cover the sunk costs of the cancelled Scarborough LRT.

Except some councillors seem almost surprised that the city is being asked to pay.

Subway-supporting TTC chair Josh Colle told the Toronto Star in January that council had never seen a breakdown of the $85 million in costs. “Absent of any construction happening, where is this supposed money?” he asked.

The suggestion seems to be that the cost is both unsubstantiated and unreasonable. But given these councillors are only bringing their concerns to light now, you’d naturally want to assume they didn’t know about the sunk costs in 2013. Otherwise, wouldn’t they have demanded answers before they dove in and supported axing the LRT?

So is it possible that subway-supporting councillors didn’t know what they were getting into?

Let’s consider the evidence.

On June 28, 2013, Metrolinx CEO Bruce McCuaig wrote a letter to Toronto City Manager Joe Pennachetti asking for clarity on council’s position on the Scarborough LRT.

The gist: hey, you guys signed a binding contract with us last year for a Scarborough LRT but now councillors keep saying they want a subway. What’s the deal?

Included in the letter is a lengthy section outlining the cost consideration of the LRT project up to that point. On page three, McCauig brought up sunk costs. “As of March 31, 2013, $85 million has been expended on the Scarborough project,” he wrote.

That’s the first mention of the $85 million.

He went on to break down that figure, which would seem to put an end to any claim that the figure has never been broken down. It includes $21 million in a prorated share of vehicle design costs, $41 million in planning, engineering and design and other project management costs.

Then, on July 12, 2013, councillors were given a report titled “Scarborough Rapid Transit Options.” It noted that “Metrolinx has identified sunk costs of $85 million relating to work already undertaken on the Scarborough LRT project” and included that $85-million figure in a table on page seven, outlining the incremental costs of switching plans to the Scarborough subway.

In other words, an $85-million payment to Metrolinx for sunk costs was always built into the subway costs presented to council.

But that’s not all. On Sept. 10, 2013, Metrolinx chair Robert Prichard wrote a letter of his own to TTC chair Karen Stintz.

He reiterated Metrolinx’s position on a potential subway switcharoo: “All sunk costs for the approved Scarborough LRT, currently estimated at $85-million, must be reimbursed by the City,” he wrote, adding also that “costs associated with the re-negotiation of the contract with Bombardier for the supply of [light rail vehicles] will need to be reimbursed by the City.”

That puts the tally at three official documents presented to all councillors indicating that endorsing the subway plan would mean paying about $85 million in sunk costs.

But we’re not done yet.

On Oct. 1, 2013, McCuaig sent another letter to Pennachetti on the subject. The dude just loves correspondence. In this one, McCuaig again tells Pennachetti about the sunk costs.

“As a condition of amending the Master Agreement, as communicated previously, it continues to be a requirement that the City of Toronto reimburse Metrolinx for the sunk costs, estimated at $85 million, invested in the Scarborough Light Rail Transit project,” he wrote.

McCuaig really does go to great lengths to highlight this point, almost as if he was concerned city councillors would ignore it.

One more.

On Oct. 3, 2013, councillors received a final report on Scarborough rapid transit options. The $85-million figure appears twice, again in a table outlining the costs of the subway option, and later as a bullet point that reads: “All sunk costs for the approved Scarborough LRT, currently estimated at $85 million, must be reimbursed by the City.”

Tallied up, that’s five documents printed and handed to city councillors making it clear that the subway option under consideration included a condition that the city would pay all sunk costs related to the cancelled Scarborough LRT.

And that’s not even mentioning the numerous media reports from 2013 that made it clear the subway deal included the condition that Toronto would pay the sunk costs. This wasn’t something that only came to light after the subway decision was made — it was always part of the decision itself.

Which brings us back to our original question. Is it possible that some councillors didn’t know about the sunk costs when they voted to support the Scarborough subway?

With five documents pointing to the answer, it’d seem — at least — that they had no excuse for not knowing.

This post was originally published at on 2015-02-06T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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