Staff Report #4
August 28, 2024
To All Commissioners
Re: Canadian Permanent Transit Fund
Recommendation
The report be NOTED and FILED.
Background
On July 17, 2024 the Federal government announced details pertaining to the Canadian Permanent Transit Fund (CPTF) and indicated that the expression of interest phase of the program was open. The Canadian Urban Transit Association (CUTA) and the Federation of Canadian Municipalities (FCM) have long advocated for a permanent source of funding dedicated to public transit. Subsequent to the CPTF being announced several years ago, the federal government has held numerous stakeholder consultations with respect to the manner in which the program would be rolled out and the related funds would be distributed. During consultation, CUTA urged the federal government to move the start date of the program forward from the planned start date of 2026 to avoid a gap in federal funding between the cessation of the Investing in Canada Infrastructure Program (ICIP) and the start of the CPTF. The July 17 announcement confirmed that the date the funds would begin to flow remained in 2026, however the intake process for expressions of interest and applications would begin immediately. This step would ensure that agreements were in place prior to the funds flowing in 2026, which would provide municipalities with the ability to plan for future spending with a dedicated source of funding. The remainder of this report provides greater detail with respect to the CPTF.
The CPTF will provide approximately $3 billion per year in targeted transit investments across Canada, with the funds beginning to flow in 2026. The core objectives of the CPTF include:
- increasing use of public transit and active transportation relative to car travel;
- increasing housing supply and affordability as part of complete, transit-oriented communities;
- contributing to climate change mitigation and improved climate resilience; and
- improved transportation options for equity-deserving groups.
The CPTF will be split into three different funding streams, each of which is expanded upon below.
Baseline Funding
The Baseline Funding stream will be approximately $500 million per year and is intended to provide stable and predictable funding for municipalities that operate public transit services. Eligibility requirements for this fund include:
- municipality must operate a fixed-route transit system;
- must provide a minimum of three years of historical ridership, population and capital investment data;
- must have a minimum annual capital expenditure of $100,000; and
- must have a minimum 30,000 annual ridership.
In addition to the transit-related requirements, participating municipalities are also required to comply with a number of housing-related items including:
- completion of a Housing Needs Assessment (for communities with a population over 30,000);
- additionally, for communities with a population over 150,000:
- concentrate more housing development near transit by allowing high-density within 800 metres of high-frequency or higher-order transit;
- eliminate mandatory minimum off-street parking requirements within 800 metres of high-frequency or high-order transit, excluding accessibility requirements; and
- enable more housing supply near post-secondary institutions by allowing high-density housing as-of-right within 800 metres of recognized post-secondary institutions
The first step in securing funding under this program is to submit an expression of interest (EOI), for which a deadline of September 16, 2024 has been set by the federal government. Applicants will be notified of their eligibility following the review of their EOI at which time they will receive communication of a notional allocation and an invitation to submit a capital plan application. This application will need to identify the 10-year capital program as it relates to public transit and active transportation projects and identify the projects for which this funding may be applied consistent with the following criteria:
- capital infrastructure projects – acquisition, enhancement, modernization, rehabilitation, construction, expansion, restoration, renovation, refurbishment, or replacement of assets; and
- non-capital projects – planning or design of transit-related infrastructure projects, feasibility studies, stand-alone design work or other related capacity building, research, or data projects.
Use of this funding is limited to costs that are considered direct and necessary for the project (expenditures related to construction and/or acquisition of assets will only be eligible as of project approval). Expenditures relating to operating costs, regular maintenance, land purchase, legal fees and financing charges/loan payments are not eligible for this funding.
The CPTF also includes maximum contribution rates per capital project as set out below:
- up to 40% of eligible costs for projects located within provinces
- up to 75% of eligible costs for projects located within territories
- up to 100% of eligible costs for Indigenous recipients or Indigenous benefiting organizations
Non-capital projects can be funded to a maximum of 80% of eligible costs. These maximum contribution rates are for all federal funds utilized for a project (no stacking of funds), with the exception being for projects receiving funding through the Canada Community Building Fund, funding delivered by the Canada Mortgage and Housing Corporation, and the Canada Infrastructure Bank which may bring the maximum federal contribution up to 100%.
Municipalities making use of this funding will need to ensure compliance with a number of other commitments including the following:
- recipients will be expected to commit to supporting Canada’s plan to achieve net-zero emissions by 2050 and to ensure that future potential climate impacts are considered;
- recipients will be required to report on progress and outcomes as specified in any funding agreements;
- recipients will also have to ensure that all projects comply with applicable codes and standards, environmental assessment and other applicable federal laws and regulations, Indigenous consultations and accommodation obligations, accessibility standards and other specific conditions that will be outlined at the Capital Plan Application stage.
London Transit administration has worked with civic administration to complete the EOI, which has been submitted. It is anticipated that notification of eligibility, including the notional annual allocation will be received late fall of 2024. Subsequent to notification, the 10-year capital program will need to be submitted outlining the projects for which this funding will be utilized going forward.
Metro-Region Agreements
The Metro-Region Agreements (MRA) stream of the CPTF will total approximately $2 billion annually, and will target the metropolitan regions where transit systems are largest and the demand for funding, scope of intergovernmental collaboration, and scale of potential impacts are highest. The key principles associated with this funding stream include:
- Improve Intergovernmental Coordination
- long term, sustainable commitment across all levels of government
- improve line of sight on investments
- leverage shared commitments to invest in transit, active transportation and housing
- collaborate to define right investments for the interconnected region
- Integrate Transit, Land Use and Housing
- bridge silos that often exist between policy areas
- help drive outcomes on modal shift, housing, climate resilience, and equity
- support increase supply of affordable housing in transit-oriented and complete communities
- Adopt a Regional Scope to Transit Planning
- respond to regional realities of interconnected mobility
- support areas with the largest and most complex public transit systems and highest demand for investments
The actual MRA will be a partnership between the Government of Canada, the province, participating municipalities and transit agencies within a metro-region that establishes a predictable, multi-year funding envelope to support mobility investments in the region and confirm the commitments to advance key federal priorities. These agreements will require the development of Integrated Regional Plans which will be developed in cooperation with all parties. These plans will outline how capital investments over a 10-year horizon, complemented by supporting initiatives, will advance shared objectives, such as modal shift, housing supply, climate resilience, and equitable access.
Eligibility for MRA’s includes the following:
- all participating organizations must be located within, be adjacent to, or be responsible for planning and infrastructure within a Census Metropolitan Area (or within a region spanning multiple Census Metropolitan Areas close to one another), as identified by Statistics Canada;
- participating organizations must include the respective provincial government for the region;
- partner organizations in the MRA must demonstrate intent to meet a specific set of federal housing conditions; and
- partner organizations must prepare an Integrated Regional Plan that outlines how capital investments supported by policy actions will achieve core objectives for the CPTF.
The MRA stream will follow a similar approach to application, with the first step being a submission of an Expression of Interest (EOI) signed by all participating parties indicating readiness and willingness to participate. This will be followed by the submission of an Integrated Regional Plan, the goals of which will include:
- a business plan for regional transit and active transportation capital needs that demonstrate expected impacts of ongoing and planned actions toward CPTF objectives;
- enhanced intergovernmental collaboration and create opportunities for coordination across the region;
- provide a shared framework for planning and investment and improve line of sight on priorities; and
- help maximize impacts of federal spending.
Subsequent to review of the Integrated Regional Plan by the Federal government, a Metro-Region Agreement will be negotiated, including long term funding agreements by participating parties. Unlike the Baseline Funding, the completion of the MRA will not see funds flow annually, rather, each project to be funded will require an application to be completed (by all participating parties) for assessment and approval by the Federal government. Applications that are approved will see specific funding agreements completed between the parties, subsequent to which funds will begin to be transferred. Consistent with the Baseline funding stream, funds under this stream will not being flowing until April 2026.
Individual programs, once approved with a funding agreement in place, will include maximum contribution rates per capital project as set out below:
- up to 40% of eligible costs for projects located within provinces
- up to 100% of eligible costs for Indigenous recipients or Indigenous benefiting organizations
- up to 80% of eligible costs for planning and design projects
These maximum contribution rates are for all federal funds utilized for a project (no stacking of funds), with the exception being for projects receiving funding through the Canada Community Building Fund, funding delivered by the Canada Mortgage and Housing Corporation, and the Canada Infrastructure Bank which may bring the maximum federal contribution up to 100%.
Eligible funding parameters for projects approved under the MRA’s include the following criteria:
- capital infrastructure projects – acquisition, enhancement, modernization, rehabilitation, construction, expansion, restoration, renovation, refurbishment or replacement of assets;
- non-capital projects – planning or design of transit-related infrastructure projects, feasibility studies, stand-alone design work or other related capacity building, research or data projects
Use of this funding is limited to costs that are considered direct and necessary for the project (expenditures related to construction and/or acquisition of assets will only be eligible as of project approval). Expenditures relating to operating costs, regular maintenance, land purchase, legal fees and financing charges/loan payments are not eligible for this funding.
The intake for the Expression of Interest for the Metro-Region Agreement stream are also open, however there is no deadline for submission as this program.
Direct Delivery
The Direct Delivery stream of the CPTF will provide approximately $500 million per year and will provide opportunities for smaller and rural communities with no transit agencies to participate in the CPTF program. The intake for this stream has not yet been opened, nor have all of the details with respect to program parameters and eligible expenditures been formalized. High level expectations for the stream have been shared, and include:
- allows for adaptability and responsiveness to current priorities and future needs
- targeted funding through competitive intakes to address specific areas and leverage existing programs (e.g. rural transit, active transportation, zero-emission technologies)
Update reports with respect to accessing the CPTF will be provided as appropriate going forward.
Recommended by:
Kelly S. Paleczny, General Manager