To All Commissioners
Re: Recosted 2018 Capital Budget Program
Recommendation
That the Commission APPROVE the recosted 2018 capital budget of $12,341,200 as summarized below noting the recosted budget reflects the previously approved 2018 capital budget program (Staff Report #5, August 30, 2017), updated pricing for 2018 bus replacement/expansion programs and carry forward amounts relating to deferred or active 2017 capital projects.
2018 Recosted Capital Budget
| Source of Investment | |||||
| Description | Capital Program Reserve | City of London | Federal Gas Tax | Provincial Gas Tax | Total |
| Stop Upgrades | $ 37,000 | $ – | $ – | $ – | $ 37,000 |
| Service Fleet | 40,000 | – | – | – | 40,000 |
| Shop Equipment | 200,000 | – | – | – | 200,000 |
| Software and Hardware | 350,000 | – | – | 250,000 | 600,000 |
| Facility Upgrades | – | 300,000 | – | – | 300,000 |
| Bus Replacements (8) | – | 2,224,800 | 1,500,000 | 836,000 | 4,560,800 |
| Bus Expansion (4) | – | 1,200,200 | – | 1,178,200 | 2,378,400 |
| Fleet Radio Replacement | – | 312,500 | – | 312,500 | 625,000 |
| TMP 2030 – BRT Strategy | – | – | – | 1,500,000 | 1,500,000 |
| Fare Processing Equipment | – | 747,500 | – | 747,500 | 1,495,000 |
| Smart Card Program | – | – | – | 605,000 | 605,000 |
| $ 627,000 | $ 4,785,000 | $ 1,500,000 | $ 5,429,200 | $ 12,341,200 | |
Background
At the August 30, 2017 Commission meeting, the 2018 capital budget program of $7,643,800 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 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 capital budget highlighting the original approved budget, pricing updates and 2017 carry forwards together with identified funding sources.
Summary of 2018 Recosted Capital Budget
| Description | Original Approved Budget | Adjustments | 2017 Carry Forward | Total |
| Program: | ||||
| Stop Upgrades | $ 37,000 | $ – | $ – | $ 37,000 |
| Service Fleet | 40,000 | – | – | 40,000 |
| Shop Equipment | 200,000 | – | – | 200,000 |
| Software and Hardware | 200,000 | – | 400,000 | 600,000 |
| Facility Upgrades | 300,000 | – | – | 300,000 |
| Bus Replacements (8) | 4,466,400 | 94,400 | – | 4,560,800 |
| Bus Expansion (4) | 2,400,400 | (22,000) | – | 2,378,400 |
| Fleet Radio Replacement | – | – | 625,000 | 625,000 |
| TMP 2030 – BRT Strategy | – | – | 1,500,000 | 1,500,000 |
| Fare Processing Equipment | – | – | 1,495,000 | 1,495,000 |
| Smart Card Program | – | – | 605,000 | 605,000 |
| Total | $ 7,643,800 | $ 72,400 | $ 4,625,000 | $12,341,200 |
| Funding: | ||||
| Provincial Gas Tax | $ 1,941,800 | $ 72,400 | $ 3,415,000 | $ 5,429,200 |
| Capital Program Reserve | 477,000 | – | 150,000 | 627,000 |
| City of London | 3,725,000 | – | 1,060,000 | 4,785,000 |
| Federal Gas Tax | 1,500,000 | – | – | 1,500,000 |
| Total | $ 7,643,800 | $ 72,400 | $ 4,625,000 | $12,341,200 |
The capital budget for the 2018 expansion and replacement buses required only a slight recosting increase of $72,400. Pricing updates from New Flyer reflect a 0.5% increase over 2017 prices for 40’ buses and has a recosting impact of $24,000 or $2,000 per bus. Costs budgeted for ancillary equipment were also increased by $48,400 to reflect enhanced requirements as the bus becomes more complex. The following table summarizes the unit price comparison and resulting increases.
Unit Price Comparison
| Bus | Budgeted | 2017 | 2018 | Price | |
| Size | Buses | Price | Price | Price | Increase |
| 40′ | 12 | $ 543,800 | $ 543,000 | $ 545,800 | $ 2,000 |
Set out in Enclosure I is the Capital Program Summary for the twelve months ending December 31, 2017. As indicated in the Enclosure, a number of the projects planned for and included in the 2017 capital budget program were not completed in 2017 or have been deferred to future years. Given funds have been approved; the outstanding amounts are carried forward to 2018 where necessary. The following table summarizes the 2017 capital expenditures for outstanding projects and the corresponding carry forward amounts, including funding source, for inclusion in the 2018 Capital Program.
Summary of 2017 Carry Forward Capital Projects
| 2017 | 2017 | 2017 | ||
| Description | Actual | Budget | Variance | Carry Forward |
| Program: | ||||
| Software and hardware | $ 718,771 | $ 1,115,000 | $ 396,229 | $ 400,000 |
| Fleet radio replacement | – | 625,000 | 625,000 | 625,000 |
| TMP 2030 – BRT strategy | – | 1,500,000 | 1,500,000 | 1,500,000 |
| Smart card program | 264,944 | 870,000 | 605,056 | 605,000 |
| Fare processing equipment | – | 1,495,000 | 1,495,000 | 1,495,000 |
| $ 983,715 | $ 5,605,000 | $ 4,621,285 | $ 4,625,000 | |
| Funding: | ||||
| Provincial Gas Tax | $ 906,429 | $ 3,955,000 | $ 3,048,571 | $ 3,415,000 |
| Capital Program Reserve | 77,286 | 590,000 | 512,714 | 150,000 |
| City of London | – | 1,060,000 | 1,060,000 | 1,060,000 |
| Total | $ 983,715 | $ 5,605,000 | $ 4,621,285 | $ 4,625,000 |
The current recommendation has the recosted increases funded by the Provincial Gas Tax Reserve and the carry forwards funded by the original funding sources identified in 2017.
The Commission will be provided with regular updates on the status of the programs included in the 2018 capital budget.
Enclosure
I – 2017 Capital Program Summary
Recommended by:
Mike Gregor – Director of Finance
Concurred in by:
Kelly S. Paleczny – General Manager
Enclosure I – 2017 Capital Program Summary – Twelve Months Ending December 31, 2017
| Description | Capital Program Reserve | City of London | Prov Ont Gas Tax Prog | Total | |
| Stop Upgrades | |||||
| Actual to-date | $ 14,753 | $ – | $ – | $ 14,753 | |
| Budget | 125,000 | – | 702,000 | 827,000 | |
| Variance | 110,247 | – | 702,000 | 812,247 | 1 |
| Service Fleet | |||||
| Actual to-date | 37,314 | – | – | 37,314 | |
| Budget | 40,000 | – | – | 40,000 | |
| Variance | 2,686 | – | – | 2,686 | |
| Shop Equipment | |||||
| Actual to-date | 167,653 | – | – | 167,653 | |
| Budget | 200,000 | – | – | 200,000 | |
| Variance | 32,347 | – | – | 32,347 | |
| Software and Hardware | |||||
| Actual to-date | 77,286 | – | 641,485 | 718,771 | |
| Budget | 590,000 | – | 525,000 | 1,115,000 | |
| Variance | 512,714 | – | (116,485) | 396,229 | 2 |
| Facility Upgrades | |||||
| Actual to-date | – | 300,000 | 187,390 | 487,390 | |
| Budget | – | 300,000 | 200,000 | 500,000 | |
| Variance | – | – | 12,610 | 12,610 | |
| Bus Replacements (14) | |||||
| Actual to-date | – | 6,107,300 | 2,140,262 | 8,247,562 | |
| Budget | – | 5,792,000 | 2,433,300 | 8,225,300 | |
| Variance | – | (315,300) | 293,038 | (22,262) | |
| Bus Expansion (4) | |||||
| Actual to-date | – | 1,100,400 | 1,248,084 | 2,348,484 | |
| Budget | – | 1,100,400 | 1,254,800 | 2,355,200 | |
| Variance | – | – | 6,716 | 6,716 | |
| Fleet Radio Replacement | |||||
| Actual to-date | – | – | – | – | |
| Budget | – | 312,500 | 312,500 | 625,000 | |
| Variance | – | 312,500 | 312,500 | 625,000 | 3 |
| TMP 2030 – BRT Strategy | |||||
| Actual to-date | – | – | – | – | |
| Budget | – | – | ,500,000 | 1,500,000 | |
| Variance | – | – | 1,500,000 | 1,500,000 | 3 |
| Fare Processing Equipment | |||||
| Actual to-date | – | – | – | – | |
| Budget | – | 747,500 | 747,500 | 1,495,000 | |
| Variance | – | 747,500 | 747,500 | 1,495,000 | 3 |
| Smart Card Program | |||||
| Actual to-date | – | – | 264,944 | 264,944 | |
| Budget | – | – | 870,000 | 870,000 | |
| Variance | – | – | 605,056 | 605,056 | 2 |
| Total program | |||||
| Actual to-date | 297,006 | 7,507,700 | 4,482,164 | 12,286,870 | |
| Budget | 955,000 | 8,252,400 | 8,545,100 | 17,752,500 | |
| Variance | $ 657,994 | $ 744,700 | $ 4,062,936 | $ 5,465,630 |
Notes:
- Shelter replacement program to be reported with PTIF funded projects. 2017 shelter program completed
- Programs not completed. Amount to be carried forward to 2018
- Programs deferred, amount to be carry forward to 2018