Staff Report #7 – Provincial/Federal Funding Update

Staff Report #7

January 27, 2021

To All Commissioners

Re: Provincial/Federal 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, 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.

The transfer payment agreement for this program has been received and is in the process of being executed.

As part of the year end process, administration will ensure that all eligible expenditures are identified and itemized on the reimbursement form. The 2020 year end reporting, scheduled to be tabled in March 2021, will identify the extent to which the Municipal Transit Enhanced Cleaning Program funding was relied upon to balance the 2020 operating budget.

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 was submitted to the Province by the October 30, 2020 deadline.

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
Total $ 9.321  $ 10.537 $19.858

While the first column in the table above was based on actuals, the remaining two columns were forecasts which were completed in September of 2020 and based on a number of significant assumptions relating to ridership and related revenue rebound. The forecasts did not include the current lockdown, which has been in effect to varying degrees since December 26, 2020 and has had negative impacts on transit ridership and related revenue. As such, the numbers included in the forecast provided to the Ministry of Transportation for the period of October 2020 through March 2021 will be subject to change as the year end is completed and the 2021 budget is re-costed to reflect current realities. The 2020 year end reporting, scheduled to be tabled in March 2021, will identify the extent to which the Safe Restart Phase I funding was relied upon to balance the 2020 operating budget.

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 program (see Enclosure I). 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;
  • Additionally, the Province has set aside $500 million in funding to be available for additional municipal transit needs, and the City of London will be eligible to receive $13,927,264 to address additional pressures based on ridership;
  • For budgeting purposes, the total available allocation of up to $37,102,943 can be used to address eligible expenditures incurred from October 1, 2020 to December 31, 2020, and those incurred from January 1, 2021;
  • 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).

London Transit administration has worked with civic administration to submit the necessary forms indicating a desire to participate in Phase II of the Safe Restart Funding Program.

The next step in the process will be the execution of a Transfer Payment Agreement (TPA). When the Safe Restart Program was initially announced, a number of criteria were listed as requirements that participating municipalities would have to agree to when executing the TPA. The initially indicated criteria are set out below.

  • 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)

The Ontario Public Transit Association (OPTA) has continued to work with Ministry of Transportation representatives in an effort to further define these requirements and ensure that all Parties have a solid understanding of the expectations associated with each prior to execution of the TPAs. This work is ongoing, and at time of report writing, no further details with respect to the requirements that will be included in the final TPA are available.

In addition to the outstanding questions regarding the criteria in the TPA, the question with respect to whether the funds identified as being available to London can be utilized post March 31, 2021 remains outstanding. Again, OPTA is continuing dialogue and advocacy for these funds to be allowed to be utilized post March 31, 2021 given the ongoing issues relating to COVID-19 that are anticipated to continue to impact the operating budget throughout 2021.

Provincial Gas Tax for Transit Program

On January 14, 2021, the Ministry of Transportation announced the funding allocations for the 2020-21 Provincial Gas Tax for Transit Program (see Enclosure II). London’s allocation for the 2020-21 period is $11,145,262. There have been no changes to the program guidelines for this reporting year.

This allocation is slightly higher than the $10.9 million estimate that was provided in the Reserve and Reserve Fund update report in March of 2020. The confirmed number will be included in the updated Reserve and Reserve Fund Report, which will be tabled in March 2021 as part of the annual year end reporting.


I – December 15, 2020 Letter from Ministry of Transportation re: Safe Restart Funding

II – January 14, 2021 Letter from Ministry of Transportation re: Provincial Gas Tax Program

Recommended by:

Kelly S. Paleczny, General Manager