Staff Report #4
October 28, 2020
To All Commissioners
Re: COVID-19 Funding Update
Recommendation
That the report be NOTED and FILED.
Background
Throughout the pandemic period, advocacy efforts by the Ontario Public Transit Association (OPTA), the Canadian Urban Transit Association (CUTA), the Association of Municipalities of Ontario (AMO), and the Federation of Canadian Municipalities (FCM) have focussed on the need for senior levels of government to provide relief funding to municipalities to help offset the impacts of COVID-19 on their operating budgets. In late June and early August, two funding programs directed specifically at providing relief to public transit systems were announced, details of each is set out below.
Province of Ontario – Municipal Transit Enhanced Cleaning Program
On June 29, 2020, the Province of Ontario announced a program that will provide $15 million in funding to municipalities across the province to support the enhanced cleaning of their public transit systems and help reduce the spread of COVID-19. The funding envelope was allocated to every jurisdiction that provides public transit, with the City of London allocation being up to $433,025. The following details with respect to this program have been confirmed:
- funding includes a one-time allocation, intended to offset costs associated with enhanced cleaning requirements during the initial period of the pandemic declaration;
- the allocation provided is a maximum amount that can be claimed against, noting actual paid invoices for purchases meeting the criteria for spending must be submitted to support the claim;
- eligible expenditures will be limited to those directly relating to cleaning of buses and facilities;
- eligible expenditures need to have been incurred between April 1, 2020 and December 31, 2020; and
- proof of expenditure must be submitted to the Province for reimbursement up to the total allocation received.
Transfer payment agreements are currently in the process of being completed by the Ministry of Transportation for execution by the municipality.
Administration continues to assess options for implementing a more sustainable program relating to bus cleanliness noting that any required equipment would be considered eligible under this program. Currently, all cleaning-related costs are included in the impacts statement under the Safe Restart Program; however, these costs could be transferred to this program, reducing the reliance on the Safe Restart Program funding, but only for expenditures up to December 31, 2020. The actual and estimates calculated for cleaning related costs, excluding the purchase of any equipment that could be covered by this program total approximately $33,800.
Federal/Provincial/Territorial Safe Restart Program
An agreement between senior levels of government has been reached for the Safe Restart Program, which includes $19 billion in new Federal funding. The program includes seven funding envelopes, with one specific to transit which includes a dedicated envelope for public transit of $2 billion made up of matching $1 billion contributions from both the Federal and Provincial governments.
Phase I Funding
On August 12, 2020, the Province announced the first phase of the funding for transit, allocating a total of $666 million to transit systems across the Province. The allocation was based on 2018 ridership, and resulted in an allocation of $18,523,658 for London Transit. The funds have been received from the Ministry of Transportation and deposited into a dedicated reserve account as required by the program guidelines.
The following bullets provide an overview of the details with respect to this phase of the program:
- Financial pressures that are eligible for reimbursement under this program include both financial pressures associated with the need to continue to operate with reduced revenue and new expenses resulting from COVID-19.
- Reduced revenue includes pressures related to farebox, advertising, parking, and contracts (i.e. school charters)
- New expenses incurred in response to the COVID-19 outbreak would include cleaning costs, new contracts, labour costs, driver protection, passenger protection and other capital costs
- The Phase I allocation is intended to cover COVID-related budget pressures for the period of April 1, 2020 through September 30, 2020
- Any funds that are not utilized for this period are to be placed into a reserve for use in covering budget shortfalls relating to COVID-19 up to and including March 31, 2021
- A reporting form, setting out budget impacts and use of funds up to September 30, 2020, as well as projected impacts through to March 31, 2021 must be submitted to the Province no later than October 30, 2020.
The reporting form and related definitions for eligible revenue and expenditure categories has been received and completed by administration, an excerpt of which is set out in the table below.
London Transit Commission COVID-Related Impacts
| Category | Total Impact
April – Sept 2020 |
Total Forecast
Oct 2020 – Mar 2021 |
Total Actual and Forecasted Impact |
| Revenue (millions) | |||
| Farebox | $ 11.095 | $ 8.981 | $ 20.076 |
| Advertising | 0 | 0.277 | 0.277 |
| Expenditures (millions) | |||
| Cleaning | 0.022 | 0.024 | 0.046 |
| Fuel | (0.344) | (0.182) | (0.526) |
| Maintenance | (0.050) | (0.050) | |
| Facilities | 0.003 | 0.003 | |
| New/Existing Contracts | (0.830) | (0.472) | (1.302) |
| Employee Related (wages/benefits) | (1.783) | 0.016 | (1.767) |
| Employee PPE | 0.142 | 0.090 | 0.232 |
| Communications | 0.002 | 0.012 | 0.014 |
| Other | (0.164) | 0 | (0.164) |
| Capital Expenditures (millions) | |||
| Driver Protection | 1.228 | 0.241 | 1.469 |
| Passenger Protection | 1.550 | 1.550 | |
| Other | |||
| Total | $ 9.321 | $ 10.537 | $19.858 |
When reviewing the above table, it is important to recognize that the first column will not reconcile directly to the operating budget reports included in the agenda (see Staff Reports 8 and 9, dated October 28, 2020). This is due to the exclusion of any COVID-related impacts that occurred in March 2020 from the table above given the program guidelines do not consider this eligible, as well as the fact that assumptions made with respect to what is a COVID-related impact on the other reports vary slightly from the eligible revenue and expenditures for this program.
As the table indicates, the total impact to date, which will be funded from the Phase I allocation of the Safe Restart Program is $9.321 million.
The third column in the table represents a forecast of what the expected COVID-related impacts will be for the period October 2020 through March 2021. These forecasts are intended only to provide the Ministry of Transportation with an estimate of what funding may be required through the remainder of the funding program window, and will be subject to adjustment as actual impacts are determined. As indicated in this column, the projected impacts from October through March total $10.537 million.
As indicated earlier in this report, the Phase I allocation for London totaled $18,523,658, which is approximately $1.334 million less than the total COVID-related impacts set out in the table, however actual numbers are likely to vary from projections given the number of unknowns with respect to what the next six months will look like, as well as confirmation whether the anticipated capital projects relating to capital expenditure will be considered eligible. Administration will continue to monitor these impacts closely so as to ensure a determination will be able to be made as to whether an application of Phase II funding will be required. Details with respect to Phase II are set out below.
Phase II Funding
The Ontario Public Transit Association continues to work with the Ministry of Transportation on clarifying the requirements associated with the Phase II portion of funding under the Safe Restart Program. The following provides a summary of what is known at time of report writing.
- Phase II allocations will require a Transfer Payment Agreement (TPA) to be executed, which will include the requirement for municipalities to demonstrate their participation and progress in the following areas:
- Engage in consolidated procurement opportunities leveraging Metrolinx and other provincial procurement tools (all municipalities)
- Review the lowest performing bus routes and consider whether they may be better serviced by microtransit (all municipalities)
- Work with the Province and Metrolinx where appropriate to determine the feasibility of implementing microtransit options on viable routes (all municipalities)
- Participate in discussions with the Province on advancing fare and service integration (GTHA and select municipalities)
- Participate in discussions with the Province to optimize transit through new possible governance structures (GTHA and select municipalities)
As indicated earlier, based on the actual and estimated impacts included in the submission to the Ministry of Transportation, an additional $1.334 million could be requested.
London Transit administration will work with civic administration to complete the required documents, noting an attestation from the City Treasurer is required for submission. The documents will be submitted as required by the October 30, 2020 deadline.
Ongoing Advocacy
Throughout the pandemic period there has been no question as to the need for public transit to continue to operate in order for communities to continue to function. What will be imperative going forward is that this fact is not lost on decision makers at all levels. There is no question that the pandemic will continue to affect budgets going forward, and difficult decisions will need to be made.
While the aforementioned programs are both welcomed, and will provide significant relief with respect to the budget concerns relating to the pandemic, they will not solve the budgetary issues projected for 2021. Both CUTA, at the Federal level, and OPTA at the Provincial level are continuing discussions with respect to the anticipated longer-term impacts of the pandemic on public transit services, noting the manner in which they traditionally operate, and are funded, may not be feasible for some time, and as such, continued relief will be required.
Advocacy with respect to these issues will continue over the coming months in an effort to gain assurances that service levels will be able to be maintained post March 2021. Should no relief be provided post March 2021 from senior levels of government, the only options for moving forward with a balanced budget will be increased contributions from the City of London, decreased service levels, or a combination of both.
Recommended by:
Kelly S. Paleczny, General Manager