Staff Report #2
March 26, 2025
To All Commissioners
Re: Recosted 2025 Capital Budget Program
Recommendation
That the Commission APPROVE the recosted 2025 capital budget of $67,568,900 as summarized below noting the recosted budget reflects the previously approved 2025 capital budget program, program updates and carry forward amounts relating to deferred or active 2024 capital projects.
2025 Recosted Capital Budget
| Description | Source of Investment | Total | |||
| Capital Program Reserve | City of London | Federal and Provincial | Provincial Gas Tax | ||
| Bus replacement – 2025 | $ – | $ 12,441,800 | $ 3,000,000 | $ 957,900 | $ 16,399,700 |
| Bus replacement – 2024 | – | 9,913,500 | 4,000,000 | 1,479,700 | 15,393,200 |
| Facility upgrades | – | 500,000 | – | – | 500,000 |
| Fare processing equip. | – | 747,500 | – | 1,747,500 | 2,495,000 |
| Information systems | 800,000 | – | – | – | 800,000 |
| Shop & garage equip. | 235,000 | – | – | – | 235,000 |
| Service fleet replacement | 65,000 | – | – | – | 65,000 |
| Stop upgrades | 96,000 | – | – | – | 96,000 |
| Fleet radio replacement | – | 312,500 | – | 312,500 | 625,000 |
| Highbury facility rebuild | – | 1,335,000 | 3,665,500 | – | 5,000,000 |
| Zero Emission Bus Pilot | – | 12,980,000 | 12,980,000 | – | 25,960,000 |
| $1,196,000 | $ 38,230,300 | $ 23,645,000 | $4,497,600 | $ 67,568,900 | |
Background
At the August 28, 2024 Commission meeting, the 2025 capital budget program of $20,084,900 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.
Summary of 2025 Recosted Capital Budget
| Description | Original Approved Budget | 2024 Carry Forward | 2025 Program Updates | Total |
| Program: | ||||
| Bus replacement – 2025 | $ 16,273,900 | $ – | $ 125,800 | $ 16,399,700 |
| Bus replacement – 2024 | – | 13,913,500 | 1,479,700 | 15,393,200 |
| Facility upgrades | 500,000 | – | – | 500,000 |
| Fare processing equip. | – | 2,495,000 | – | 2,495,000 |
| Information systems & hardware | 500,000 | 300,000 | – | 800,000 |
| Shop & garage equip. | 200,000 | 35,000 | – | 235,000 |
| Service fleet replacement | 65,000 | – | – | 65,000 |
| Stop upgrades | 46,000 | 50,000 | – | 96,000 |
| Fleet radio replacement | – | 625,000 | – | 625,000 |
| Highbury facility rebuild | 2,500,000 | 2,500,000 | – | 5,000,000 |
| Zero Emission Bus Pilot | – | 25,960,000 | – | 25,960,000 |
| Total | $ 20,084,900 | $ 45,878,500 | $ 1,605,500 | $ 67,568,900 |
| Funding: | ||||
| Provincial Gas Tax | $ 832,100 | $ 2,060,000 | $ 1,605,500 | $ 4,497,600 |
| Capital Program Reserve | 811,000 | 385,000 | – | 1,196,000 |
| City of London | 13,609,300 | 24,621,000 | – | 38,230,300 |
| City – Federal Gas Tax | 3,000,000 | 4,000,000 | – | 7,000,000 |
| ICIP – Provincial | 832,500 | 832,500 | – | 1,665,000 |
| ICIP – Federal | 1,000,000 | 1,000,000 | – | 2,000,000 |
| Senior Government | – | 12,980,000 | – | 12,980,000 |
| Total | $ 20,804,900 | $ 45,878,500 | $ 1,605,000 | $ 67,568,900 |
2024 Carry Forward
The nature and scope of capital budget projects often result in the project spanning multiple years, as such, 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 2025 and have been reflected in the recosted capital budget program in the report recommendation:
- Bus Replacement – 2024 ($13,913,500), noting $1,004,800 has been incurred for ancillary equipment in 2024 for both the 2024 & 2025 bus replacement programs, and thus is not being carried over;
- Fare Processing Equipment ($2,495,000);
- Information System Software & Hardware ($300,000);
- Shop and Garage Equipment ($35,000);
- Stop Upgrades ($50,000);
- Fleet Radio Replacement ($625,000)
- Highbury Facility Rebuild ($2,500,000); and
- Zero Emission Bus Pilot ($25,960,000).
Given funds have been approved and set aside for the projects in prior years, there are no negative impacts on the current funding sources.
2025 Program Updates
During the capital budget recosting process, updates to the prior approved costs are often warranted giving unexpected cost escalations. All programs have been reviewed, with the Bus Replacement Programs for both 2024 and 2025 being the only programs requiring further attention.
With the approval of the 2024-2027 capital budget included in the city’s multi-year budget, administration proceeded with an RFP for the supply of buses required for the 2024 through 2027 replacement and expansion programs in the spring of 2024. As set out in Staff Report #2 dated August 28, 2024, the contract award for LTC’s 2024-2027 replacement bus program with New Flyer Industries resulted in a bus price greater than that budgeted previously for the program. As the program is fully funded by the City of London, administration was advised by civic administration to submit an amended business case, outlining the impact of the increased prices as part of the 2025 budget process. The business case was approved but required LTC to fund the increase through the PGT reserve. To offset this hit to the reserve, the ongoing surplus that results from the timing of implementing service growth hours will be utilized. Note that in each of 2024-2027, the implementation of LTC’s conventional service hour growth commences in September, rather than January. This planned timing has always resulted with an in-year surplus compared to the approved annualized funding levels.
The update to the prices included in the 2025 Bus Replacement program were included in the 2025 capital budget approved last August and are reflected in the original approved budget figures. However, the prices for the buses included in the 2024 Bus Replacement program did not reflect the updated prices as the 2024 capital budget recosting process occurred prior to knowing the results of the RFP and price escalation.
The 2025 program updates include not only the bus price changes for the 2024 Bus Replacement program but also an increase in the actual costs to outfit the buses for service including bus prep and inspection costs as well as equipment costs for the camera system, AVL system, traffic signal priority and ail filtration.
The following table summarizes the updates required to both the 2024 and 2025 bus expansion programs.
Summary 2024 & 2025 Bus Expansion Programs
| Description | Original Budget | 2025 Program Updates | Total | |||
| Units | Amount | Units | Amount | Units | Amount | |
| Bus Replacement – 2024 | 17 | $ 13,913,500 | – | $ 1,479,700 | 17 | $ 15,393,200 |
| Bus Replacement – 2025 | 17 | 16,273,900 | – | 125,800 | 17 | 16,399,700 |
| 34 | $ 30,187,400 | – | $ 1,605,500 | 34 | $ 31,792,900 | |
| Funding | Amount | Amount | Amount | |||
| Provincial Gas Tax | $ 832,100 | $ 1,605,500 | $ 1,479,700 | |||
| City of London | 22,355,300 | – | 22,355,300 | |||
| Federal Gas Tax – C/L | 7,000,000 | – | 7,000,000 | |||
| Total | $ 30,187,400 | $ 1,605,500 | $ 31,792,900 | |||
The Commission will be provided with regular updates on the status of the programs included in 2025 capital budget.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager