Staff Report #9 – 2027 – 2036 Capital Budget Program

Staff Report #9

August 31, 2026

To All Commissioners

Re: 2027 – 2036 Capital Budget Program

Recommendation

The Commission:

i. APPROVE the 2027 capital budget program of $37,220,000 comprised of the following programs:

Program Units Amount
Bus replacement 17 $ 18,306,900
Bus expansion 7 7,602,100
Facility upgrades 500,000
Highbury Facility Rebuild 10,000,000
Information system software and hardware 500,000
Shop and garage equipment 200,000
Service fleet replacement 65,000
Stop upgrades 46,000
Total 24  $ 37,220,000
Funding  Amount
LTC Capital Program Reserve Fund $ 811,000
City of London 25,172,400
Canada Public Transit Fund (CPTF) 5,106,000
Provincial – ICIP Project Funding 2,786,500
Federal – ICIP Project Funding 3,344,100
Total  $ 37,220,000

noting identified funding from the City of London of $25,172,400 and the Canada Public Transit Fund (CPTF) program of $5,106,000 is subject to the approval of Municipal Council as part of the City of London’s 2027 budget approval process; and

ii. DIRECT Administration to submit the recommended 2027 Capital Budget Program, and provisional estimates for 2028 to 2036 to civic Administration consistent with the City of London’s reporting format.

Background

The recommended 2027-2036 capital budget program as summarized in Enclosure I is predicated on a strategy that focuses investment on maintaining infrastructure in a state of good repair and providing growth capital investment necessary to support the provisional operating estimates for the original 2024-2027 multi-year budget, and subsequently updated for 2025, 2026 and 2027. This capital program is also presented in keeping with the Commission’s Asset Management Plan, 2024-2027 Business Plan and support for the Five-Year Service Plans.

The following sets out discussion specific to each of the more significant areas of the Capital Budget Program.

New Bus Program

The capital budget for the ten-year period of 2027-2036 calls for the purchase of a total of 213 new replacement and expansion buses at an estimated cost of approximately $268.2 million. It should be noted that the cost estimates are based on the price of a diesel bus. Once the Electric Bus Pilot is underway and the Fleet Transition Plan has been updated and approved by the Commission, the bus costs will be adjusted to be reflective of the chosen technologies going forward.

2027-2036 New Bus Purchases

Description Total Units Amount
Bus Replacement 170  $ 214,855,500
Bus Expansion 43 53,364,700
Total 213  $ 268,200,200

The bus costs included in the table above are based on the 2027 base price of 40’ and 60’ foot diesel buses contracted for 2024-2027 with New Flyer Industries Canada, plus estimated CPI per the contract. Further discussion with respect to the funding allocations is provided below in each of the specific programs relating to new bus purchases. Given the ongoing and escalating trade war, it is anticipated that bus prices will continue to be impacted for the foreseeable future, and while current pricing was utilized for the budget forecast, it was not possible at time of budget preparation to determine tariff impacts. As such, administration will address any price fluctuations as part of the annual budget recosting.

Bus Replacement Program

A key component of the fleet management strategy was the establishment of a progressive fleet replacement program targeted to reach and maintain an average fleet age of six years, consistent with the Commission’s Asset Management Plan. Based on this strategy, over the period of 2027-2036, a total of 170 replacement buses are scheduled to be purchased requiring a total investment of approximately $214.9 million. However, it should be noted that with fleet having reached 251 buses in 2026, a lifecycle replacement plan of 17 per year, will result in an aging fleet beyond the target average of six years. Given the current size of the fleet, replacement buses should be targeted at approximately 21 buses per year, not 17. Current funding sources do not support an immediate change in 2027, however, an increase to 21 annual replacement buses should be anticipated as part of the 2028-2031 multi-year budget submission.

The table below sets out the breakdown of the Bus Replacement program as well as a summary of the funding requirements over the period of 2027-2036.

Summary 2027-2036 Bus Replacement Program

2027 2028-2036 Total
Description Units Amount Units Amount Units Amount
40’ Diesel Bus 17 $ 17,538,500 151 $ 186,196,000 168 $ 203,734,500
60’ Diesel Bus 2 3,083,400 2 3,083,400
Ancillary Equipment 768,400 7,269,200 8,037,600
$ 18,306,900 $ 196,548,600 170 $ 214,855,500
Funding Amount Amount Amount
City of London $ 16,543,000 $ 174,119,100 $ 190,662,100
CPTF 1,763,900 1,763,900
Funding TBD 22,429,500 22,429,500
Total $ 18,306,900  $ 181,333,200  $ 214,855,500

Historically, Provincial Gas Tax (PGT) was utilized to cover approximately 1/3 of the costs of this program. However, during the 2024-2027 multi-year budget setting process for both the operating and capital budget programs, a shift away from utilizing PGT to fund ongoing capital programs was approved given ongoing funding was not sufficient to cover both capital and operating requirements. As a result, funding for this program for 2024 going forward was budgeted to be funded from the City of London, either by way of the capital levy or non-rate supported sources such as Federal Gas Tax.

The contract for London Transit Commission’s 2024-2027 diesel bus requirements was tendered and awarded in April 2024 after the development and approval of the 2024-2033 multi-year budget (MYB) capital budget program. The resulting bus price from the contract award was greater than the levels included in the approved plan, as were the costs associated with additional requirements for ancillary equipment necessary when outfitting the buses for service. Further, the buses purchased in 2026 had an additional tariff of 5.3% added to the cost, which was previously unbudgeted. The updated prices have been reflected in each of the Bus Replacement Program’s costs (as noted in the table above), as well as the Bus Expansion Program discussed below, including the additional cost for tariffs.

The Canada Public Transit Fund (CPTF) was announced in 2024, providing $3 billion annually for public transit and active transit infrastructure beginning in 2026-27. CPTF will provide stable and predictable funding to address long-term transit goals. CPTF is split into three different funding streams. The third stream, Baseline Funding, is an approximately $500 million annual envelope for the broader CPTF program. Baseline Funding is intended to provide predictable long-term funding to communities with existing transit systems to support routing capital and not-capital investments. In November 2024, The City of London was approved for an annual allocation of $5,106,083 of Baseline Funding, equivalent to a 10-year allocation of $51,060,830. In July, Council approved the use of the April 2026 to March 2027 allocation of $5.1 million to be utilized for a supplemental EA study for north rapid transit ($980,000) and the remaining $4.1 million for replacement and expansion buses.

The two bus related capital programs, bus replacement ($3.0 million) and the bus expansion ($1.1 million) have been updated in 2026 to utilize this incremental funding which is necessary to support the additional costs as noted above and approved by Council. CPTF funding has also been identified for use in each of the replacement ($1.8 million) and expansion programs ($3.3 million) in 2027 but will require Council approval for this allocation.

Funding beyond 2027 that is short of the current Council approved allocation is identified as Funding TBD. As noted, current costs have escalated beyond what had been covered by the original MYB submission, noting that $5.1 million annually through the CPTF is one viable option for funding requiring future Council approval.

Bus Expansion Program

The 2027-2036 capital budgets for bus expansion support the continued growth and expansion of the conventional transit service. After the completion of the 10-year capital forecast associated with the multi-year budget process, the Commission approved the 2024-2027 Business Plan and supporting Five Year Service Plans for the conventional and specialized services. The expansion bus requirements associated with service improvements set out in the 2025-2029 Conventional Service Plan are significantly higher than estimates included in the 10-year capital forecast. The need for additional expansion buses is due to the nature of the service improvements being recommended, noting they primarily occur during weekdays and peak operating times, when there is no ability to increase service levels without the addition of a bus.

The table below sets out the breakdown of the two programs as well as a summary of the total bus expansion requirements over the period of 2027-2036, which has been updated to reflect the expansion bus requirements set out in the 2025-2029 Conventional Service Plan.

Summary 2027-2036 Bus Expansion Program

2027 2028-2036 Total
Description Units Amount Units Amount Units Amount
Bus Expansion 7 $ 7,602,100 36 $ 45,762,600 43  $ 53,364,700
Funding Amount Amount Amount
City of London $ 4,260,000 $ 37,026,000 $ 41,286,000
CPTF 3,342,100  3,342,100
Funding TBD 8,736,600 8,736,600
Total $ 7,602,100  $ 45,762,600  $ 53,364,700

The 2027 bus expansion program per the Five Year service planned called for an additional seven buses to accommodate the anticipated growth hours. During the 2026 budget process, the Commission submitted an assessment growth business case and was approved for 13,400 growth hours, requiring four additional buses. The capital requirements for these additional buses in 2027 is funded through assessment growth. The remaining three buses are proposed to be funded through CPTF as discussed above.

Expansion buses for 2028 and 2029 also reflect the requirements set out in the Five Year Service Plan, with the bus requirements for 2030-2036 as included withing the initial MYB capital submission. Given the increased costs required to purchase each bus, there is a funding shortfall of $8.7 million from 2028-2036. Administration will look to determine appropriate sources with the support of civic Administration during the 2028-2031 MYB process.

The Expansion Bus Program does not include the additional bus requirements related to the implementation of bus rapid transit as this is included in the Rapid Transit Business Case, which has been separately approved by Municipal Council. Nine 60’ articulated buses are expected to arrive in 2027 in order to support the initial launch of RT’s East Leg.

Facility Upgrades – Demolish/Rebuild Highbury Facility

Summary particulars for the 2027-2036 facility upgrade programs are set out in the table below.

Summary 2027-2036 Facility Upgrade Program

Description 2027 2028-2036 Total
Annual Facility Upgrades  $ 500,000  $ 4,745,700  $ 5,245,700
Demolish/Rebuild Highbury Facility 10,000,000 305,830,000 315,830,000
$ 10,500,000  $ 310,575,700  $ 321,075,700
Funding
City of London $ 4,369,400  $ 204,619,800  $ 208,989,200
ICIP – Provincial 2,786,500 48,159,100 50,945,600
ICIP – Federal 3,344,100 57,796,800 61,140,900
Senior Government
$ 10,500,000 $ 310,575,700 $ 321,075,700

Notwithstanding the Highbury Facility Replacement Project, regular maintenance is still required at both the Highbury and Wonderland facilities. This program covers costs associated with building structure, building systems (heat, light, water, air, etc.) as well as grounds. The annual $500,000 allocation is generally split between the two facilities depending on where the need is in any given year. For 2026, work under this project will include asphalt and concrete repair, hoist refurbishments at Wonderland, solar panel repairs at Wonderland as well as roof work at the Highbury facility.

Phase I of the Highbury facility replacement project ($194,500,000) has received approval from the Federal Government to proceed. A tender inviting proposals from consulting engineering / architectural firms to act as prime consultants for the design, tender call, and supervision of the demolition and construction of the facility has been issued and recommended for award (see Staff Report #10, dated August 31, 2026). Costs included for 2027 is the estimate of the work covered by the tender with demolition and construction anticipated to begin in 2028. Phase II of this project represents the portion of the rebuild that could not be completed within the available funding envelope when the project was approved. Phase II is budgeted to begin in 2031 at a projected cost of $133,000,000 with funding yet to be determined.

Information System Software and Hardware

For 2027-2036, $5.0 million has been identified for both new and upgraded system software as well as for new and replacement network/server/workstation infrastructure requirements as set out in the table below.

Summary 2027-2036 Information System Hardware/Software

Description 2027 2028-2036 Total
Information systems HW/SW  $ 500,000  $ 4,500,000  $ 5,000,000
Funding
LTC Capital Program Reserve  $ 500,000  $ 4,500,000  $ 5,000,000

In addition to the regularly required hardware replacements, a number of larger projects have been identified for consideration in the remainder of the multi-year budget period including:

  • Interactive Voice Response system replacement
  • ESRI GIS upgrade
  • Website Update/Revamp
  • Parklane software replacement (HR Employee tracking system)
  • Platinum Accounting Replacement

These projects will be further assessed and prioritized as part of the annual planning process, and those selected for implementation in 2027 will be included in the 2027 Work Program, which is tabled annually with the Commission for approval at the January meeting. The Information System software and hardware program is fully funded from the LTC capital program reserve fund.

Shop and Garage Equipment

The table below sets out the budgeted requirements for the Shop and Garage Equipment Program for 2027 as well as the remaining nine years covering 2028-2036.

Summary 2027-2036 Shop and Garage Equipment

Description 2027 2028-2036 Total
Shop and Garage Equipment  $ 200,000  $ 1,800,000  $ 2,000,000
Funding
LTC Capital Program Reserve  $ 200,000  $ 1,800,000  $ 2,000,000

Shop and garage equipment includes such items as steam cleaners, skid steer, forklift, pallet trucks, lifting equipment/systems, floor sweeper/scrubber as well as bus maintenance and servicing tools. The items purchased are based upon need (for new equipment) and useful life assessment when dealing with equipment replacement. The expenditure covers shop and equipment needs at both the Highbury and Wonderland facilities. The program expenditures are fully funded from the capital program reserve fund.

Service Fleet Replacement

London Transit maintains a service fleet of ten vehicles. The vehicles are used by Operations staff (Inspectors) as well as Planning and Maintenance staff e.g., mobile mechanic. The replacement of the vehicles is generally based upon a five-to-10-year lifespan dependent upon the nature and use of the vehicle. The vehicles to be replaced are subject to mechanical and structural assessment. Vehicle replacements range between one and two vehicles per year, based on the state of repair. The table below sets out the budget allocation for the Service Fleet Replacement project covering 2027 as well as the period from 2028-2036, noting all investment in this program is fully funded from the capital program reserve fund.

Summary 2027-2036 Service Fleet Replacement

Description 2027 2028-2036 Total
Service Fleet Replacement  $ 65,000  $ 765,000  $ 830,000
Funding
LTC Capital Program Reserve  $ 65,000  $ 765,000  $ 830,000

Stop Upgrades

The Stop Upgrade Program as set out in the table below, covers the costs associated with installing new stop locations as well as the annual expansion of the passenger shelter program and installation of cement pads. The budget allocation is adjusted annually to coincide with the work required based on the annual service plan. The table below sets out the budget allocations noting this program is fully funded from the Capital Program Reserve Fund.

Summary 2027-2036 Stop Upgrades

Description 2027 2028-2036 Total
Annual Bus Stop Upgrades  $ 46,000  $ 414,000  $ 460,000
Funding
LTC Capital Program Reserve  $ 46,000  $ 414,000  $ 460,000

Reconciliation with City of London Format

Subsequent to Commission approval, Administration will work to reformat the 2027-2036 Capital Budget Program to be consistent with the standard presentation format utilized for all civic departments, boards and commissions, noting that amendment business cases for both the Bus Replacement Program and the Bus Expansion Program will also be submitted reflecting the changes noted above.

Enclosure

I – Summary 2027-2036 Capital Budget Program

Recommended by:

Mike Gregor, Director of Finance

Shawn Wilson, Director of Operations – Specialized

Joanne Galloway, Director of Human Resources

Craig Morneau, Director of Fleet & Facilities

Katie Burns, Director of Planning

David Butler, Director of Operations – Conventional

Concurred in by:

Kelly S. Paleczny, General Manager