Staff Report #5
August 25, 2021
To All Commissioners
Re: 2022 – 2031 Capital Budget Program
i. APPROVE the 2022 capital budget program of $16,362,200 comprised of the following programs:
|Bus replacement||17||$ 10,874,500|
|Information system software and hardware||550,000|
|Shop and garage equipment||200,000|
|Service fleet replacement||50,000|
|Province of Ontario (Provincial gas tax)||$ 2,614,200|
|LTC capital program reserve fund||923,200|
|Development charges – City of London||433,600|
|City of London||6,544,700|
|Federal gas tax program – C/L||2,866,000|
|Provincial – ICIP Project Funding||1,354,700|
|Federal ICIP Project Funding||1,625,800|
noting identified funding from the City of London of $6,544,700 and Federal Gas Tax program of $2,866,000 is subject to the approval of Municipal Council as part of the City of London’s 2022 budget approval process; and
ii. DIRECT the administration submit the recommended 2022 capital budget program, and provisional estimates for 2023 to 2031 to civic administration consistent with the City of London’s reporting format.
The recommended 2022-2031 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 2020-2023 as set out in Staff Report #3, dated August 28, 2019, and updated for 2022 in Staff Report #4, dated August 25, 2021, and are in keeping with the Commission’s Asset Management Plan.
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 2022-2031 calls for the purchase of a total of 199 new replacement and expansion buses at an estimated cost (based upon 2021 dollars) of approximately $135.5 million. As noted in the following table, replacement buses account for 170 of the total 199 buses to be acquired. The number reflected in this budget do not include the buses required for the operation of rapid transit on the East London Link and the Wellington Gateway as the costs for same are included in the budgets for each of these specific projects.
2022-2031 New Bus Purchases
|Bus Replacement||170||$ 111,633,100|
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.
Based on this strategy, over the period of 2022-2031, a total of 170 replacement buses are scheduled to be purchased, requiring a total investment of approximately $111.6 million. The program funding is allocated between the City of London (45%), Federal gas tax program (24%), and Provincial gas tax program (31%), the details of which are set out in the table below.
Summary 2022-2031 Bus Replacement Program
|Bus Replacement||17||$ 10,874,500||153||$ 100,758,600||170||$ 111,633,100|
|Province of Ontario (PGT)||24%||$ 2,614,200||32%||$ 32,493,600||28%||$ 35,107,800|
|City of London||50%||5,394,300||44%||44,169,000||46%||49,563,300|
|Federal Gas Tax – C/L||26%||2,866,000||24%||24,096,000||26%||26,962,000|
|Total||$ 10,874,500||$ 100,758,600||$ 111,633,100|
Included in the program for 2022 and beyond are additional costs associated with fully replacing the AVLC equipment (MDT & APC units) along with the equipment for the camera system. Historically these parts were swapped out of the retiring buses; however, given the increased amount of technology on board buses, and the rapid pace of change/upgrades to it, this approach is no longer applicable. Equipment in good operating order will be refurbished and placed into inventory for the full fleet as required.
By the end of 2030, the fleet will have an average age of 6.0 years which is consistent with the goal in the Commission’s Asset Management Plan.
Bus Expansion (Existing and New Growth Areas)
The 2022-2031 capital budgets for bus expansion support the direction of the Five Year Service Plan Framework as approved by the Commission at its February 27, 2019 meeting. The bus expansion program requires the addition of 29 buses bringing the total fleet to 256 buses by December 2030.
Summary 2022-2031 Bus Expansion Program
|Bus Expansion||5||$ 4,064,500||24||$ 21,135,400||29||$ 25,200,000|
|Provincial Government (ICIP)||33%||$ 1,354,700||33%||$ 7,044,500||33%||$ 8,399,200|
|City of London||16%||650,400||16%||3,382,100||16%||4,032,500|
|City of London DC’s||11%||433,600||11%||2,254,700||11%||2,688,300|
|Federal Government (ICIP)||40%||1,625,800||40%||8,454,200||40%||$ 10,080,000|
|Total||$ 4,064,500||$ 21,135,500||$ 25,200,000|
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, expansion buses have not been included beyond this point.
Proceeding with the Expansion Bus Program for 2022 will be contingent upon the service growth budget on the operating side being approved for implementation in 2021. The final number of expansion buses will be dependent upon the nature of the service improvements that are included in the 2022 Service Plan.
The expansion bus program does not include the additional bus requirements related to the implementation of bus rapid transit.
In February 2019, the Commission approved in principle, the Strategic Assessment of LTC Facility Needs and Path Forward, which ultimately called for the phased replacement of the Highbury Avenue facility. A number of key findings included in the assessment with respect to the Highbury facility are set out below.
- the main building is now 70 years of age and well past its economic and design life;
- the building materials and, particularly, the concrete floors in the maintenance and storage areas, are in poor condition and deteriorating;
- the workplace areas and environment are sub-standard to current, modern facilities; and
- the existing buildings are energy inefficient and the interior layout, particularly in the maintenance and storage areas, presents on-going operational challenges.
As indicated earlier, given the significant incremental costs associated with moving the facility, a detailed assessment of the feasibility of constructing a new facility at the existing Highbury location was undertaken. The complicating factor with respect to this option is the need to continue to be able to service and maintain a significant portion of the fleet while construction is ongoing. A number of options were considered during this assessment phase, with the final recommended strategy being to rebuild on the Highbury site in a phased manner, providing the ability to continue to service and maintain buses while construction is ongoing. While this path forward is extended and more complicated as compared to a new build, it is the most cost effective when considering the all-in costs associated with both the build and the annual ongoing operating costs.
The estimated operating and capital costs associated with the recommended path forward are $6 million and $167 million respectively. The previously approved Capital Budget included a placeholder amount of $45.6 million related to facility replacement. This amount has not been amended in the 2022-2031 Capital Budget based on the assumption that the work would take place subsequent to 2031 unless a source of funding is identified that could move the project up. In addition, the entire Highbury facility plan may be subject to revision subsequent to the assessments of implications on the facility requirements relating to the planned transition to electric buses going forward. The placeholder numbers in the budget have not been adjusted at this time due to the uncertainty of the path forward for this project.
In addition to the costs associated with the replacement of the Highbury facility, this program budget includes annual allocations for the ongoing maintenance of both the Highbury and Wonderland facilities which covers building structure, building systems (heat, light, water, air, etc.) as well as grounds and has a budget of $500,000 in 2022.
Summary particulars for the 2022-2031 facility upgrade program is set out below.
Summary 2022-2031 Facility Upgrade Program
|Annual Facility Upgrades||$ 500,000||$ 4,500,000||$ 5,000,000|
|Demolish/Rebuild Highbury Facility||–||83,700,000||83,700,000|
|$ 500,000||$ 88,200,000||$ 88,700,000|
|City of London||$ 500,000||$ 88,200,000||$ 88,700,000|
Information System Software and Hardware
For 2022-2031, $2.7 million has been identified for both new and upgraded system software as well as for new and replacement network/server/workstation infrastructure requirements. All program initiatives are prioritized and funded by the capital program reserve fund.
For 2022, $550,000 has been allocated to the program which is supported by the capital program reserve fund. The moneys have been provisionally allocated for:
- $120,000 for the ongoing replacement/upgrading of system hardware infrastructure i.e. work stations, servers, etc.
- $80,000 for program updating of various management information data base system upgrades
- $350,000 for the replacement of the Finance & Payroll systems that are beyond their expected useful lives.
The recommended capital budget includes a placeholder amount of $200,000 per year for each year thereafter (2023-2031 inclusive). Also included is $350,000 for the replacement of the Human Resources system in 2023 that is also beyond its expected useful life. The Information System software and hardware program is directly linked to London Transit’s Technology Plan.
Shop and Garage Equipment
Total investment in shop and garage equipment over the ten year period of 2022-2031 is set at $2 million. The budget provides for the purchase of new and/or replacement shop and garage equipment. 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 450 Highbury Ave N. facility as well as the 3508 Wonderland Rd facility. The program expenditures are fully funded from the capital program reserve fund.
Service Fleet Replacement
The LTC 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 ten year lifespan dependent upon the nature and use of the vehicle. The vehicles to be replaced are subject to mechanical and structural assessment. For the purpose of the 2022-2031 budget, one vehicle per year is scheduled to be replaced, with the exception of 2023, 2026 and 2029, when two vehicles are planned to be replaced given their current state of repair, for a total investment over the period of $500,000. The investment is fully funded from the capital program reserve fund.
The 2022-2031 capital budget program calls for $0.607 million investment in stop upgrades. Over the periods of 2021-2023, the annual budgets associated with this program are significantly higher than the remaining years. This is due to the assessment of the changes that will be associated with the next five year Service Plan, and the number of stops that will be impacted. Subsequent to 2023, it is anticipated that the majority of re-routing with the current system will be complete and annual Service Plans will be dealing only with new stop locations for new services. The stop upgrades program deals with the ongoing annual expansion of the passenger shelter program and installation of cement pads. The installation of passenger shelters is undertaken on a priority basis with the selection being based upon a warrant system that considers boardings, service frequency and site conditions, etc.
2021 Capital Budget Program
Included in Enclosure I is also the 2021 Capital Program and current projection for the year. Given the ongoing COVID-19 situation, as well as the historical need to carry forward projects that are either unable to be completed or that aren’t required at this time, some of these projects will be carried forward to 2022 and will be included in the Capital budget recosting completed in March 2022. Given they have been approved and have identified funding, they are included as placeholders.
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