Staff Report #6
April 13, 2023
To All Commissioners
Re: Recosted 2023 Capital Budget Program
Recommendation
That the Commission APPROVE the recosted 2023 capital budget of $22,574,500 as summarized below noting the recosted budget reflects the previously approved 2023 capital budget program, program updates and carry forward amounts relating to deferred or active 2022 capital projects.
2023 Recosted Capital Budget
| Source of Investment | |||||
| Description | Capital Program Reserve | City of London | Federal and Provincial (ICIP) | Provincial Gas Tax | Total |
| Bus replacement | $ – | $ 7,585,000 | $ – | $ 5,263,300 | $ 12,848,300 |
| Facility upgrades | – | 751,600 | – | – | 751,600 |
| Fare processing equip. | – | 747,500 | – | 1,747,500 | 2,495,000 |
| Information systems | 1,054,800 | – | – | – | 1,054,800 |
| Shop & garage equip. | 200,000 | – | – | – | 200,000 |
| Service fleet replacement | 130,000 | – | – | – | 130,000 |
| Stop upgrades | 941,100 | – | – | – | 941,100 |
| Bus stop amenities | – | 154,300 | 424,400 | – | 578,700 |
| Fleet radio replacement | – | 312,500 | – | 312,500 | 625,000 |
| Smart card program | – | – | – | 450,000 | 450,000 |
| Highbury facility rebuild | – | 667,500 | 1,832,500 | – | 2,500,000 |
| $2,325,900 | $10,218,400 | $ 2,256,900 | $7,773,300 | $ 22,574,500 | |
Background
At the August 31, 2022 Commission meeting, the 2023 capital budget program of $16,357,200 was approved. A recosting exercise for both capital and operating budgets occurs at the beginning of the year after all City of London funding is confirmed and takes into consideration pricing updates, program changes as well as any prior year projects that have not been completed or deferred to the future. The following table provides a summary by project of the proposed recosted capital budget highlighting the original approved budget, 2023 program updates as well as 2022 projects to be carried forward.
Summary of 2023 Recosted Capital Budget
| Description | Original Approved Budget | 2023 Program Updates | 2022 Carry Forward | Total |
| Program: | ||||
| Bus replacement | $ 12,361,200 | $ 487,100 | $ – | $ 12,848,300 |
| Facility upgrades | 500,000 | – | 251,600 | 751,600 |
| Fare processing equip. | – | – | 2,495,000 | 2,495,000 |
| Information systems & hardware | 550,000 | – | 504,800 | 1,054,800 |
| Shop & garage equip. | 200,000 | – | – | 200,000 |
| Service fleet replacement | 130,000 | – | – | 130,000 |
| Stop upgrades | 116,000 | – | 825,100 | 941,100 |
| Bus stop amenities | – | – | 578,700 | 578,700 |
| Fleet radio replacement | – | – | 625,000 | 625,000 |
| Smart card program | – | – | 450,000 | 450,000 |
| Highbury facility rebuild | 2,500,000 | – | – | 2,500,000 |
| Total | $ 16,357,200 | $ 487,100 | $ 5,730,200 | $ 22,574,500 |
| Funding: | ||||
| Provincial Gas Tax | $ 4,776,200 | $ 487,100 | $ 2,510,000 | $ 7,773,300 |
| Capital Program Reserve | 996,000 | – | 1,329,900 | 2,325,900 |
| City of London | 1,349,500 | – | 1,465,900 | 2,815,400 |
| City – Federal Gas Tax | 7,403,000 | – | – | 7,403,000 |
| ICIP – Provincial | 832,500 | – | 192,900 | 1,025,400 |
| ICIP – Federal | 1,000,000 | – | 231,500 | 1,231,500 |
| Total | $ 16,357,200 | $ 487,100 | $ 5,730,200 | $ 22,574,500 |
2023 Program Updates
At the October 27, 2022 Commission meeting, the early purchase for the 2023 replacement buses from New Flyer was approved in order to secure delivery in 2023. Included was a price increase of approximately 21% over the last bus order relating to the standard price escalation in the contract which takes into account increases in materials costs as well as the value of the Canadian dollar. The significant increase in pricing was not unexpected given global trends in pricing for raw materials coupled with ongoing supply chain issues. The confirmed pricing for the 40’ buses was $801,028.05 with the pricing for the 60’ buses at $1,212,807.58.
The tables below set out the variance from the original budget for the 2023 Bus Replacement Program. In addition to the adjustment relating to the actual vs budgeted price, the makeup of the replacement bus order was also amended to reduce the 40’ bus order to 14 and the 60’ bus order to one. This adjustment was made in order to avoid a request for increased capital funding from the City for 2023, noting the additional expenditure set out in the table of $487,100 is covered by Provincial Gas Tax funding.
| Description | Units | 2023 Budget Amount | Units | Amended Cost | 2023 Program
Update |
| Bus Replacement (40’) | 15 | $ 9,883,500 | 14 | $ 11,214,000 | $ 1,330,500 |
| Bus Replacement (60’) | 2 | 2,000,000 | 1 | 1,212,800 | (787,200) |
| Ancillary Equipment | 477,700 | 421,500 | (56,200) | ||
| 17 | $ 12,361,200 | 15 | $ 12,848,300 | $ 487,100 | |
| Funding | |||||
| Provincial Gas Tax | $ 4,776,200 | $ 5,263,300 | $ 487,100 | ||
| City of London | 182,000 | 182,000 | – | ||
| Federal Gas Tax – C/L | 7,403,000 | 7,403,000 | – | ||
| Total | $ 12,361,200 | $ 12,848,300 | $ 487,100 |
2022 Carry Forward
Consistent with prior years, delayed or incomplete capital projects are carried forward to the following year if still warranted. The following projects, with remaining available funding noted, are necessary for carry forward into 2023:
- Facility Upgrades ($251,600)
- Fare Processing Equipment ($2,495,000)
- Information System Software & Hardware ($504,800)
- Stop Upgrades ($825,100)
- Bus Stop Amenities ($578,700)
- Fleet Radio Replacement ($625,000)
- Smart Card Program ($450,000)
Given funds have been approved and set aside for the projects in prior years, there are no negative impacts on the current funding sources.
The Commission will be provided with regular updates on the status of the programs included in 2023 capital budget.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager