Staff Report #1
November 24, 2021
To All Commissioners
Re: 2022 Replacement Bus Order
That the Commission APPROVE the early purchase of the 2022 replacement bus requirements (15 – 40’ buses and two – 60’ foot articulated buses) from New Flyer Industries Canada, ULC at a total cost of $10,913,909, exclusive of applicable taxes.
At the November 27, 2019 meeting, the Commission approved a contract with New Flyer Industries Canada, ULC for the supply of both 40’ and 60’ replacement and expansion buses for the period of 2020 through 2022. The contract includes an annual escalation clause that is used to determine the pricing for each type of bus. The confirmed pricing for the 40’ buses for 2022 is $605,142.67, represents an approximate 3.2% increase over 2021 pricing. The increase in cost over the previous year relates to the standard price escalation in the contract. The confirmed price for the 60’ bus for 2022 is $918,382.23, noting that although no 60’ buses have been purchased under this contract, this price has been adjusted from the price included in the 2019 contact consistent with the price escalation provisions.
The tables below set out the variance from budget to projected actual for the 2022 Bus Replacement Program based on the actual 2022 unit pricing. In addition to the adjustment relating to the actual vs budgeted price, the makeup of the replacement bus order has also been amended to reduce the 40’ bus order to 15 and increase the 60’ bus order to two. This adjustment has been made given an overall fleet assessment which has determined that two articulated buses have reached their useful life and need to be replaced.
The 2022 Bus Replacement Program will see the replacement of the only four 30’ buses in the fleet, which have reached the end of their useful life. These buses were purchased specifically for use on the community bus routes, based on the assumption that ridership would be lower on these routes, and that the smaller buses would provide for easier access to locations that were difficult to serve with a 40 foot bus. Over the past number of years, ridership on the community bus routes has been such that, on many days, 40 foot buses are required to accommodate the demand. An assessment was undertaken of the stop locations for the community bus routes in order to determine whether there would be any negative impacts associated with transitioning the 30 foot buses out of service to be replaced with 40 foot buses. The assessment has concluded that a small number of stops may need to be moved by up to 100 metres in order to accommodate the 40’ buses, but that all routes would be able to continue to operate as they are without any significant challenges. This transition will also provide for additional capacity on these routes going forward. The details of the required changes to stop locations will be determined as part of the 2022 service planning process (see Staff Report #2, dated November 24, 2021).
As indicated in the table, the variance relating to both unit price and adjustment to the makeup of the order is being reflected with a slight increase in Provincial Gas Tax funding, and as such, no modifications in City of London funding is required. The budget numbers in the table below are inclusive of ancillary and preparation costs associated with preparing the buses for service, and as such, are higher than the costs in the report recommendation, which covers the bus purchase only.
2022 Bus Replacement Program
|Description||Units||2022 Budget Amount||Units||Amended Cost||Variance|
|Bus Replacement (40’)||16||$ 9,521,600||15||$ 9,077,145||$ (444,455)|
|Bus Replacement (60’)||1||916,000||2||1,836,764||920,764|
|17||$ 10,874,500||17||$ 11,350,809||$ 476,309|
|Provincial Gas Tax||$ 2,614,200||$ 2,777,270||$ 476,309|
|City of London||5,394,300||5,203,200|
|Federal Gas Tax – C/L||2,866,000||2,866,000|
|Total||$ 10,874,500||$ 11,037,570||$ 476,309|
Over the past number of years, the Commission has approved ordering buses in November for the following year, notwithstanding the capital budget program has not been approved by Municipal Council at that time. As set out in the report recommendation, the same process is being recommended this year for the replacement bus program only. Ensuring buses arrive within the year they are required has been critical in managing the transition process as well as the costs associated with keeping buses on the road longer than anticipated. New Flyer has advised that an order confirmation by November 30, 2021 would see the 2022 replacement buses arriving between June and August of 2022.
Given the bus replacement program is a long-standing program that has been included in the City of London capital budget with allocated funding for many years, it is not anticipated this program will be the subject of debate during budget deliberations. Should the confirmation of the bus order be pushed to be subsequent to the final approval of the budget programs by Municipal Council, there is little chance that buses would be delivered in 2022.
The Bus Expansion program, covering the period of 2020-2028, was one of the projects submitted and approved for funding under the Investing in Canada Infrastructure Program – Transit Stream. Given the uncertainty with respect to the type of bus (40’ vs 60’) that would be required in each year of the program, the budget for expansion buses was arrived at by using a weighted average price between a 40’ and 60’ bus. Given the expansion buses being recommended for purchase in 2022 are four 40’ buses and one 60’ bus, the budget variance is favourable notwithstanding the increase in the base price of the buses.
The table below sets out the variance from budget to projected actual for the 2022 Bus Expansion Program based on the actual 2022 unit pricing.
2022 Bus Expansion Program
|Description||Units||2022 Budget Amount||Amended Cost||Variance|
|Bus Expansion||5||$ 4,064,500||$ 3,596,400||$ (468,100)|
|ICIP – Provincial||$ 1,354,700||$ 1,198,682||$ (156,018)|
|ICIP – Federal||1,625,800||1,438,560||(187,240)|
|City of London||650,400||575,495||(74,905)|
|City of London DC’s||433,600||383,663||(49,937)|
|Total||$ 4,064,500||$ 3,596,400||$ (468,100)|
Notwithstanding the need for the five expansion buses in order to implement the planned service improvements for 2022, the confirmation of the order for the expansion buses is not being recommended at this time given the uncertainty with respect to the 2022 operating budget. As set out in Staff Report #2, dated November 24, 2021, administration will bring back final recommendations with respect to the 2022 Service Plan at the March 2022 meeting, which is subsequent to the approval of 2022 Assessment Growth Business Cases. Should the recommendation in March be to proceed with service improvements for 2022, an additional recommendation calling for the purchase of the required expansion buses will be included in that report.
Mike Gregor, Director of Finance
Craig Morneau, Director of Fleet & Facilities
Concurred in by:
Kelly S. Paleczny, General Manager