Staff Report #3
August 30, 2023
To All Commissioners
Re: 2024 – 2033 Capital Budget Program
i) APPROVE the 2024 capital budget program of $59,967,300 comprised of the following programs:
|Bus replacement||17||$ 14,918,300|
|ZEB Fleet Transition||6,783,000|
|Electric Bus Trial Program||10||25,960,000|
|Highbury Facility Rebuild||2,500,000|
|Information system software and hardware||500,000|
|Shop and garage equipment||200,000|
|Service fleet replacement||65,000|
|Province of Ontario (Provincial gas tax)||$ 0|
|LTC Capital Program Reserve Fund||811,000|
|Development charges – City of London||909,000|
|City of London||26,425,000|
|Federal gas tax program – C/L||4,000,000|
|Provincial – ICIP Project Funding||3,661,300|
|Federal ICIP Project Funding||4,398,000|
|Federal Government (Zero Emission Transit Fund)||12,980,000|
noting identified funding from the City of London of $26,425,000 and Federal Gas Tax program of $4,000,000 is subject to the approval of Municipal Council as part of the City of London’s multi-year budget approval process;
ii) DIRECT the administration submit the recommended 2024 capital budget program, and provisional estimates for 2025 to 2033 to civic administration consistent with the City of London’s reporting format.
The recommended 2024-2033 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 2024-2027 as set out in Staff Reports #1 and #2, dated August 30, 2023, and are in keeping with the Commission’s Asset Management Plan.
As noted in the table in the recommendation, the Provincial Gas Tax is no longer adequate to fund any portion of the capital program. Historically the funds in this reserve were utilized in part to support the annual bus replacement and bus expansion programs. Over the period 2020-2023, inflationary impacts associated with capital projects were funded with additional contributions from the Provincial Gas Tax Reserve versus seeking additional funding from the City of London. As discussed in Staff Report #1 dated August 30, 2023, the Provincial Gas Tax Reserve will be depleted at the end of 2023, and going forward, the annual allocation received from the Province will be applied directly to the conventional transit operating budget. Program specific impacts of this shift in funding will be discussed in later sections of this report.
Budget Update Approach
In addition to updating the program particulars with current cost estimates and applying annual inflationary impacts consistent with the direction provided by civic administration, consideration was given to the items included in the City of London Strategic Plan that may have an impact on the 2024-2033 Capital Budget Program, each of which is discussed in greater detail below.
Mobility and Transportation – item 1.1a – Build infrastructure that provides safe, integrated, connected, reliable and efficient transportation choices – The Stop Upgrade program includes the required funding associated with the provision of new bus stops and shelter locations including required cement pads, electricity where applicable and bus stop signage.
Mobility and Transportation – item 1.2c – Continue to support the London Transit Commission’s Zero Emission Bus Fleet Implementation Framework – The costs associated with this item are included in both the Bus Replacement Program and Bus Expansion Program as the incremental costs associated with the purchase of zero-emission buses and the related charging infrastructure versus diesel buses. In addition, the Electric Bus Trial Program includes the costs associated with the initial purchase of 10 battery electric buses and the related charging infrastructure as well as the facility retrofit costs required to be able to maintain the new technology buses.
Mobility and Transportation – item 1.3a, 1.4a and 1.6a – Support greater access to affordable, reliable public transit and paratransit through the implementation of the London Transit Commission’s 5 Year Service Plans, including growth hours – The Bus Expansion program includes a total of 34 buses to address the planned service improvements over the 10 year period. The allocation of expansion buses by year will be adjusted to match actual service improvements as they are confirmed each year.
The remainder of the report sets out discussion specific to each of the programs included in the capital budget program.
New Bus Program
The capital budget for the ten year period of 2024-2033 calls for the purchase of a total of 221 new replacement and expansion buses at an estimated cost of approximately $411.5 million. The cost estimates are inclusive of the incremental costs associated with transitioning the bus fleet to zero-emission technology beginning in 2024. As noted in the following table, replacement buses account for 170 of the total 211 buses to be acquired.
2024-2033 New Bus Purchases
|Bus Replacement (Diesel Bus Costs)||170||$ 169,799,400|
|Zero Emission Bus Fleet Transition (Incremental)||188,070,200|
|Electric Bus Trial Program||10||14,140,000|
The table has been broken down to delineate the incremental costs associated with the transition of the bus fleet to zero-emission technology. The replacement bus costs included in the table above are based on the 2023 price of 40’ and 60’ foot diesel buses plus annualized inflation. The Zero-Emission Bus Fleet Transition costs include the incremental costs associated with transitioning from diesel to zero-emission buses and will be included as a growth business case when submitted to the City of London noting it ties directly to the City of London Strategic Plan item 1.2c as referenced earlier in this report. The costs in this program also include the related charging infrastructure that will be required for the transition to electric buses. Further discussion with respect to the funding allocations is provided below in each of the specific programs relating to new bus purchases.
Bus Replacement Program/ZEB Fleet Transition
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.
Based on this strategy, over the period of 2024-2033, a total of 170 replacement buses are to be purchased. The actual cost of the buses will be dependent upon the timing associated with the transition to replacing diesel buses with zero-emission buses as they are retired. The table below sets out the breakdown between the costs of continuing to purchase diesel buses and the incremental costs of transitioning to zero-emission bus technology. Given the Electric Bus Trial Program is not yet underway, the assumptions included in this project are that Hybrid Diesel/Electric will be purchased in 2024 and 2025, followed by electric buses from 2026 through 2033.
Summary 2024-2033 Bus Replacement Program
|Bus Replacement||17||$ 14,918,300||153||$ 154,881,100||170||$ 169,799,400|
|ZEB Fleet Transition||6,783,000||150,459,300||157,242,300|
|$ 21,701,300||$ 305,340,400||$ 327,041,700|
|City of London||$ 10,918,300||$ 136,381,100||$ 147,299,400|
|Federal Gas Tax – C/L||4,000,000||18,500,000||22,500,000|
|Total||$ 21,701,300||$ 305,340,400||$ 327,041,700|
Historically, Provincial Gas Tax was utilized to cover approximately 29% of the costs of this program. As indicated earlier in this report, given the reserve has been depleted, this is no longer an option. The funding historically allocated from Provincial Gas Tax have been transferred to the City of London. The funding TBD source is likely to be a combination of City of London and Federal Funding from the Zero Emission Transit Fund, however the funding application for this program has yet to be submitted and as such, nothing has been confirmed.
For the 2024 Bus Replacement Program, the capital submission to the City of London will indicate the costs associated with the continued purchase of diesel buses for 2024. Given the City of London Strategic Objective of transitioning the bus fleet to zero-emission technology (included in the Climate Emergency Action Plan), a business case will be prepared for the incremental costs associated with purchasing hybrid diesel/electric buses versus diesel (additional $6,783,000).
For the years 2025-2033, the ZEB Fleet Transition program includes the incremental costs associated with the purchase of electric buses as well as the costs of the related charging infrastructure required to operate the buses (both wayside and depot chargers).
Based on the schedule of continued purchase of 17 replacement buses per year, the average fleet age will remain at approximately 6 years consistent with the Commission’s Asset Management Plan.
Bus Expansion (Existing and New Growth Areas)
The 2024-2033 capital budgets for bus expansion support the continued growth and expansion of the conventional transit service. Bus expansion is broken into two programs in the 10 year capital forecast; expansion buses funded under the current Investing in Canada Infrastructure Program (ICIP) Bus Expansion Program, and those required once the ICIP program is completed. The table below sets out the breakdown of the two programs as well as a summary of the total bus expansion requirements over the period 2024-2033.
Summary 2024-2033 Bus Expansion Program
|Bus Expansion (ICIP)||10||$ 8,495,000||13||$ 11,802,400||23||$ 20,297,400|
|ZEB Fleet Transition||30,827,900||30,827,900|
|10||$ 8,495,000||34||$ 61,778,600||44||$ 70,283,600|
|City of London||$ 1,359,200||$ 13,383,300||$ 14,742,500|
|City of London DC’s||909,000||8,926,300||9,835,300|
|Province of Ontario (ICIP)||2,828,800||3,930,200||6,759,000|
|Government of Canada (ICIP)||3,398,000||4,720,900||8,118,900|
|Total||$ 8,495,000||$ 61,778,600||$ 70,283,600|
Of note, the Expansion Bus Program was approved for funding through the Federal/Provincial Investing in Canada Program (ICIP), with both levels of government approving their share of the funding for the program. The ICIP program covers the period from date of approval by both senior levels of government to March 31, 2028, and as such, the expansion buses included in the capital budget for 2028 are not subject to this funding. The funding allocations between City of London and City of London Development Charges are based on a historical factor that may not be consistent going forward given changes to legislation.
While the funding requirements for the expansion bus program post 2027 are allocated to the City of London (and Development Charges), the Federal Government’s Permanent Transit Fund is set to roll out beginning in 2026 and capital expenditures of this nature are anticipated to be eligible for this program. Given the final details with respect to London’s allocation of the funding and the program expenditure eligibility, this has not been included in the forecast at this time.
The Expansion Bus Program does not include the additional bus requirements related to the implementation of bus rapid transit as this is being submitted as a separate program for multi-year budget deliberation.
Electric Bus Trial Program
The trial program for Zero-Emission buses is included in its entirety in the 2024 year. The joint procurement initiative is underway, with the final contract award anticipated in the first quarter of 2024. The table below provides a breakdown of the component parts of the program and the anticipated funding sources noting that the Federal Zero-Emission Transit Funding application has not been submitted and as such, funding shares have not been confirmed.
Summary 2024-2033 Electric Bus Trial Program
|Battery Electric Buses||10||$ 11,100,000|
|Overhead Opportunity Chargers||3||2,160,000|
|Civil Works for Charger Installation||1,300,000|
|Facility Upgrades for Grid Connection||10,000,000|
|Data Collection Software||520,000|
|City of London||$ 12,980,000|
|Federal – Zero-Emission Transit Fund||12,980,000|
Facility Upgrades – Demolish/Rebuild Highbury Facility
Summary particulars for the 2024-2033 facility upgrade programs are set out in the table below.
Summary 2024-2033 Facility Upgrade Program
|Annual Facility Upgrades||$ 500,000||$ 4,500,000||$ 5,000,000|
|Demolish/Rebuild Highbury Facility||2,500,000||330,000,000||332,500,000|
|$ 3,000,000||$ 334,500,000||$ 337,500,000|
|City of London||$ 1,167,500||$ 150,532,500||$ 151,700,000|
|ICIP – Provincial||832,500||53,067,500||53,900,000|
|ICIP – Federal||1,000,000||64,400,000||65,400,000|
|$ 3,000,000||$ 334,500,000||$ 337,500,000|
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 2024, anticipated work under this project includes asphalt and concrete repair, heating and air conditioning system maintenance, installation of ceiling fans, maintenance of security cameras, replacement/upgrades of overhead and manual doors and other building repairs as necessary.
Phase I of the Highbury facility replacement project ($199,500,000) is yet to receive approval from the Federal Government to proceed. As such, the allocation in 2024 is related to the detailed design work and preparation of the request for proposal for the work based on the assumption the project will be approved some time in 2023. It is not anticipated that actual construction work will begin until late 2025/early 2026 given the work that is required is subsequent to funding approval and in advance of contract award. 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 2029 at a projected cost of $133,000,000 with funding yet to be determined (noting the budget projections assume 50% city funding and 50% senior government funding).
Information System Software and Hardware
For 2024-2033, $5.0 million has been identified for both new and upgraded system software as well as for new and replacement network/server/workstation infrastructure requirements as set out in the table below.
Summary 2024-2033 Information System Hardware/Software
|Annual Facility Upgrades||$ 500,000||$ 4,500,000||$ 5,000,000|
|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 2024 including:
- Automatic Vehicle Location/Communication system upgrade
- Interactive Voice Response system replacement
- Trapeze upgrade (conventional scheduling system)
- ESRI GIS upgrade
- Website Update/Revamp
- Parklane software replacement (HR Employee tracking system)
- Platimum Accounting Replacement
The Information System software and hardware program is directly linked to London Transit’s Technology Plan, and all expenditures are 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 2024 as well as the remaining nine years covering 2025-2033.
Summary 2024-2033 Shop and Garage Equipment
|Shop and Garage Equipment||$ 200,000||$ 1,800,000||$ 2,000,000|
|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), Planning staff 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 2024 as well as the period from 2025-2033, noting all investment in this program is fully funded from the capital program reserve fund.
Summary 2024-2033 Service Fleet Replacement
|Service Fleet Replacement||$ 65,000||$ 855,000||$ 920,000|
|LTC Capital Program Reserve||$ 65,000||$ 855,000||$ 920,000|
The Stop Upgrade Program 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 program budget as set out in the table below provides for approximately five new cement pads and three new shelters per year as well as the costs associated with the relocation of two shelters each year. 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 2024-2033 Stop Upgrades
|Annual Facility Upgrades||$ 46,000||$ 414,000||$ 460,000|
|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 2024-2033 Capital Budget Program to be consistent with the standard presentation format utilized for all civic departments, boards and commissions. The growth budget components of the capital budget will be included as a growth business case.
Mike Gregor, Director of Finance
Shawn Wilson, Director of Operations
Joanne Galloway, Director of Human Resources
Craig Morneau, Director of Fleet & Facilities
Katie Burns, Director of Planning
Concurred in by:
Kelly S. Paleczny, General Manager