Staff Report #6
March 31, 2021
To All Commissioners
Re: COVID-19 Funding Update
That the report be NOTED and FILED.
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 of 2020, two funding programs directed specifically at providing relief to public transit systems were announced, updates with respect to each are 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 have been completed and the final submission for payment has been made. The total eligible expenditures submitted for reimbursement was $103,373.97.
Federal/Provincial/Territorial Safe Restart Program
An agreement between the Provincial and Federal governments was reached for the Safe Restart Program in 2020, which included a dedicated envelope of funding for public transit of $2 billion.
The Safe Restart Program for Transit was rolled out in three phases, each of which is discussed further below.
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 in Ontario. The split 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 was required to 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 completed by administration and submitted to the Province.
The total COVID-related impacts that were covered by the Phase I portion of the Safe Restart Funding for the period April 2020 through September 2020 was $9.3 million, leaving approximately $9.2 million of Phase I funding to be used to offset COVID-related impacts for the period October 2020 through March 2021.
Phase II Funding
On December 15, 2020, the Ministry of Transportation provided an update on the funding for Phase II of the Safe Restart Funding for Transit program. The letter confirms the following:
- The City of London will be eligible to receive an allocation of up to $23,175,680 to support transit related COVID-19 pressures incurred from October 1, 2020 through March 31, 2021. Payments will be based on a one-time claim for eligible expenditures incurred during this period;
- Eligible expenditures for Phase II are consistent with Phase I, and will need to be netted against any savings associated with COVID-19 (e.g. reduced service).
In early March, the Ministry of Transportation released the Transfer Payment Agreements for the Phase II funding.
The Transfer Payment Agreement (TPA) was approved by Municipal Council on March 23, 2021, and has been forwarded to the Province for final execution. The TPA, which was mandatory for any transit system wanting to access Safe Restart Funding to cover COVID-related impacts for the period October 2020 through March 2021, included a number of special conditions to which the municipality was required to agree to on behalf of the transit authority, each of which are set out below.
- has engaged or will engage, as requested and in a manner to be specified by the Province, including share information, with the Province to determine the benefit of optional consolidated procurement of specific COVID-19 pandemic related items;
- has considered or will consider whether On-demand Microtransit, or other service innovations, would better serve Low-performing Routes or cancelled or new routes than traditional fixed-route service as part of the Recipient’s regular service reviews;
- has engaged or will engage, as requested and in a manner to be specified by the Province, with the Province or Metrolinx, or both, on lessons learned and capacity building to support future consideration of On-demand Microtransit by the Recipient;
- has participated or will participate, as requested and in a manner to be specified by the Province, in discussions lead by the Province or Metrolinx, or both, on improved fare and service integration and work toward implementing options that would improve the rider experience; and
- has requested in writing, provincial assistance in discussions to transform transit delivery between neighboring municipal governments, where there is a local interest and benefit to pursuing structural reforms.
The Ontario Public Transit Association (OPTA) in partnership with the Ministry of Transportation, held a series of conference calls for those participating in the Safe Restart Phase II funding to provide an overview of the TPA requirements as well as to answer any questions. Through the dialogue on the calls, and follow up conversations with Ministry of Transportation representatives, administration was able to confirm that London Transit is compliant with all of the applicable special conditions (noting provisions iv and v do not apply to London).
Administration was also able to confirm that drawing additional funds from the Safe Restart Reserve (established with Phase I funding) to cover the COVID-related impacts for the period October 2020 through December 2020 in order to balance the 2020 year end was appropriate.
The next required step with respect to claiming any of the Phase II allocation will be the submission of a form in May 2021, which details the COVID-related budget impacts for the period October 2020 through March 2021. Subsequent to submission of this form, the Province will reconcile any outstanding Phase I funding against the new claim, and either issue additional Phase II funding to cover the difference, or require the recipient to return any unused Phase I funding.
Phase III Funding
Details with respect to Phase III of the Safe Restart Funding for Transit program were also confirmed in early March. The details with respect to the Phase III funding include:
- The City of London will be eligible to receive an allocation of up to $18,105,442 to support transit related COVID-19 pressures incurred from April 1, 2021 through December 31, 2021;
- The entire allocation will be transferred upon completion of the sign-back letter;
- Eligible expenditures for Phase III are consistent with Phases I and II, and will need to be netted against any savings associated with COVID-19 (e.g. reduced service);
- Additional categories of expenditure which can be funded on a 50/50 cost share have been added including:
- Initiatives (including short-term foundational actions) that support a long-term vision for regional fare and service integration;
- On-Demand Microtransit (ODMT) studies and pilot initiatives, including capital expenses incurred; and
- Expenses to support the transformation of transit structures/governance between neighboring municipal governments, where the Province has been engaged in discussions. The Municipality must use.
- Municipalities may request an extension of any unused Phase III funding to be carried forward into the 2022 calendar year for use up to March 31, 2022.
The Phase III funding did not require a Transfer Payment Agreement, but did require a sign-back letter from the Treasurer confirming the amount and purpose of the funds. This sign-back has been completed by civic administration and returned to the Ministry of Transportation. The Phase III funds will flow in one lump sum (similar to the Phase I funds) and be required to be deposited into a dedicated reserve.
As indicated in Staff Report #4, dated March 31, 2021, the Phase III funding provides the opportunity to balance the 2021 operating budgets for conventional and specialized transit services. The extent to which this funding will be relied upon, and the amount, if any that will be available for carry forward into 2022 will not be known until closer to year end.
While the confirmation of both the Phase II and Phase III programs, with the extended timeline for the Phase III funding provides relief for transit agencies, concern across the Province remains with respect to the significant amounts of unused allocations from Phase II, and whether these unused funds will remain in the Safe Restart Transit Stream.
The Ontario Public Transit Association has submitted a letter to Minister Mulroney (see Enclosure I) requesting that these funds remain in the transit stream, noting the impacts of the pandemic are anticipated to continue into 2022. Further, a number of transit systems have indicated that the funding allocation provided in Phase III will not be adequate to balance their budgets in 2021. The Ontario Big City Mayors have submitted a letter to Minister Mulroney supporting this position.
The transit industry, through the Ontario Public Transit Association and the Canadian Urban Transit Association will continue to advocate for the required funding to allow transit systems across the country to continue to operate as they experience ongoing pandemic-related impacts.
Kelly S. Paleczny, General Manager