Edmonton signs Capital Line LRT south contract, council questions cost

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The contract to build Edmonton’s Capital Line LRT south extension has been signed, but some councillors still have questions about why the cost is more than $240 million higher than the city expected just last year.

Capital Line Design-Build Ltd., a subsidiary of Ledcor Group of Companies with AECOM working on design, will build the next phase of the south leg extension from the Century Park LRT station to Ellerslie Road, the city announced in a Wednesday news release. The contract was signed after council agreed in a private meeting May 22 to increase the budget by about 24 per cent, up to $1.34 billion from $1.08 billion last year.

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The 4.5-kilometre line adds two LRT stations — one in Twin Brooks, and one in Heritage Valley connecting to the existing transit centre and park and ride. The consortium of companies will provide LRT vehicles, build an underpass at 23 Avenue, an operations and maintenance facility, and bridges across Blackmud Creek and across Anthony Henday Drive.

“Building on Ledcor’s 75-year legacy of serving Edmontonians, we are thrilled to be chosen by the City of Edmonton, with our design partner AECOM, to construct this vital new phase of public transit which will serve the city’s growing population for many decades to come,” Brad Mytko a senior vice-president of Ledcor, said in the news release. “With passion and dedication, we will deliver a successful project, ensuring safety every step of the way.”

Mayor Amarjeet Sohi said in the release the extension will “help improve sustainable mobility options as we grow to a city of two million by increasing ridership capacity and providing additional transportation options.”

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Timeline for cost increases questioned

After council approved the increase in private last month, information about the new cost was only revealed in an attachment to a borrowing bylaw for Tuesday’s and Wednesday’s council meetings.

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Inflation is a key reason cited for the higher cost.

A borrowing bylaw is a formality that allows the city to borrow money to pay for the projects elected officials have already approved. Council typically rubber-stamps such bylaws without debate, but took the unusual step of asking questions about and discussing the $242-million budget boost in public during Wednesday’s council meeting.

From the get-go, city administrative staff reminded council that, while they are glad to give this update for the public, this is not an opportunity to relitigate the spending.

But some councillors took the opportunity to ask questions about why the costs are higher than expected.

Coun. Tim Cartmell asked staff to lay out a timeline. Council heard the original budget was set in a 2022 business case. The provincial government agreed to join in 2020, and the federal government agreed in 2021, contributing $300 million and $394.2 million respectively. The city would pay $333 million covered by a 1.02 per cent tax increase between 2022 and 2027, approved by the former city council in June 2021.

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In early 2023, the city did an updated “affordability estimate” and recommended council agree to reduce the scope of some parts of the project — such as building the Heritage Valley station on the ground level instead of being elevated — to stay within the budget of $1.08 billion. Council approved and the project went out to tender.

“So in 2023, we already knew that the amount of funding we were getting from other levels of government was not going to be proportionally the same as the business case. We were going to have to put at least some more in?” Cartmell asked.

City staff responded they believed by reducing the scope they would be able to build the extension within budget, and the cost was slightly higher but within the expected range.

“This is very blurry. This is very blurry,” Cartmell said.

Despite the confusion, the city doesn’t expect any further cost increases. That’s because once the contract is signed the builder is supposed to be responsible for covering unexpected costs.

But before the contract was signed, a previous staff report in May 2023 said the city is “responsible for any cost overruns” beyond the business case the provincial and federal governments signed on to. Regardless, the city plans to lobby other orders of government for more funding.

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The cost isn’t ideal but the mayor pointed out costs will only increase if the city doesn’t act now.

“I’m not happy about increases, no one’s happy about increases, but this is the reality we have, because this is the bid price,” Sohi said.

The city is expected to release a redacted version of the contract with Capital Line Design-Build Ltd. within two months of the contract being finalized.

lboothby@postmedia.com

@laurby

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