Staff Report #9
March 27, 2024
To All Commissioners
Re: Recosted 2024 Capital Budget Program
Recommendation
That the Commission APPROVE the recosted 2024 capital budget of $70,288,500 as summarized below noting the recosted budget reflects the previously approved 2024 capital budget program, program updates and carry forward amounts relating to deferred or active 2023 capital projects.
2024 Recosted Capital Budget
| Description |
Source of Investment |
Total | |||
| Capital Program Reserve | City of London | Federal and Provincial | Provincial Gas Tax | ||
| Bus replacement | $ – | $ 21,832,800 | $ – | $ 5,263,300 | $ 27,096,100 |
| Bus expansion | – | 2,268,200 | 6,226,800 | – | 8,495,000 |
| Facility upgrades | – | 801,800 | – | – | 801,800 |
| Fare processing equip. | – | 747,500 | – | 1,747,500 | 2,495,000 |
| Information systems | 1,188,000 | – | – | – | 1,188,000 |
| Shop & garage equip. | 240,000 | – | – | – | 240,000 |
| Service fleet replacement | 155,000 | – | – | – | 155,000 |
| Stop upgrades | 100,000 | – | – | – | 100,000 |
| Bus stop amenities | – | 59,900 | 164,700 | – | 224,600 |
| Fleet radio replacement | – | 312,500 | – | 312,500 | 625,000 |
| Smart card program | – | – | – | 408,000 | 408,000 |
| Highbury facility rebuild | – | 667,500 | 1,832,500 | – | 2,500,000 |
| Zero Emission Bus Pilot | – | 12,980,000 | 12,980,000 | – | 25,960,000 |
| $1,683,000 | $39,670,200 | $ 21,204,000 | $7,731,300 | $ 70,288,500 | |
Background
At the August 30, 2023 Commission meeting, the 2024 capital budget program of $59,967,300 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 2024 Recosted Capital Budget
| Description | Original Approved Budget | 2024 Program Updates | 2023 Carry Forward | Total |
| Program: | ||||
| Bus replacement | $ 14,918,300 | $ – | $ 12,177,800 | $ 27,096,100 |
| Bus expansion | 8,495,000 | – | – | 8,495,000 |
| Facility upgrades | 500,000 | – | 301,800 | 801,800 |
| Fare processing equip. | – | – | 2,495,000 | 2,495,000 |
| Information systems & hardware | 500,000 | – | 688,000 | 1,188,000 |
| Shop & garage equip. | 200,000 | – | 40,000 | 240,000 |
| Service fleet replacement | 65,000 | – | 90,000 | 155,000 |
| Stop upgrades | 46,000 | – | 54,000 | 100,000 |
| Bus stop amenities | – | – | 224,600 | 224,600 |
| Fleet radio replacement | – | – | 625,000 | 625,000 |
| Smart card program | – | 408,000 | 408,000 | |
| ZEB fleet transition | 6,783,000 | (6,783,000) | – | – |
| Highbury facility rebuild | 2,500,000 | – | – | 2,500,000 |
| Zero Emission Bus Pilot | 25,960,000 | – | – | 25,960,000 |
| Total | $ 59,967,300 | $ (6,783,000) | $ 17,104,200 | $ 70,288,500 |
| Funding: | ||||
| Provincial Gas Tax | $ – | $ – | $ 7,731,300 | $ 7,731,300 |
| Capital Program Reserve | 811,000 | – | 872,000 | 1,683,000 |
| City of London | 27,334,000 | – | 1,603,700 | 28,937,700 |
| City – Federal Gas Tax | 4,000,000 | – | 6,732,500 | 10,732,500 |
| ICIP – Provincial | 3,661,300 | – | 74,900 | 3,736,200 |
| ICIP – Federal | 4,398,000 | – | 89,800 | 4,487,800 |
| Senior Government | 12,980,000 | – | – | 12,980,000 |
| Funding TBD | 6,783,000 | (6,783,000) | – | – |
| Total | $ 59,967,300 | $ (6,783,000) | $ 17,104,200 | $ 70,288,500 |
2024 Program Updates
The capital budget for the 2024 Bus Replacement Program included the costs associated with the continued purchase of diesel buses. Given the City of London Strategic Objective of transitioning the bus fleet to zero-emission technology (included in the Climate Emergency Action Plan), a business case was included in the 2024-2027 multi-year budget submission to the City for the incremental costs associated with purchasing hybrid diesel/electric buses versus diesel, at an additional cost of $6,783,000. This program, referred to as ZEB Fleet Transition, was included in the August capital budget at a total cost of $6,783,000. Given the business case was not approved, the 2024 program will continue with the purchase of diesel buses and additional funds for the transition have been removed.
2023 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 2024 and have been reflected in the recosted capital budget program in the report recommendation:
- Bus Replacement ($12,177,800);
- Facility Upgrades (301,800);
- Fare Processing Equipment ($2,495,000);
- Information System Software & Hardware ($688,000);
- Shop and Garage Equipment ($40,000);
- Service Fleet Replacement ($90,000);
- Stop Upgrades ($54,000);
- Bus Stop Amenities ($224,600);
- Fleet Radio Replacement ($625,000); and
- Smart Card Program ($408,000).
Given funds have been approved and set aside for the projects in prior years, there are no negative impacts on the current funding sources.
Bus Replacement & Bus Expansion Programs
The 2023 Bus Replacement Program experienced a delay with the arrival of 15 replacement buses arriving in early January 2024. For that reason, the bulk of the program’s budgeted costs ($12,177,800) were not incurred in 2023 and thus will carry forward to the 2024 capital budget as noted above.
At the June 28, 2023 meeting, the Commission approved the order of ten 40’ expansion buses to ensure bus availability for service expansion in 2024/2025. The program for these expansion buses was included in the 2024 capital budget at a total of $8,495,000. Arrival of the buses is expected to begin in April 2024.
With the recent approval of the 2024-2027 capital budget included in the city’s multi-year budget, administration has proceeded with an RFP for the supply of buses required for the 2024 through 2027 replacement and expansion programs. The results of the RFP and recommendation for contract award will be tabled with the Commission subsequent to the completion of the RFP process. The 2024 replacement program is budgeted at a total cost of $14,918,300 and plans for fifteen 40’ and two 60’ diesel buses.
The following table summarizes each of the 2023 Bus Replacement Program (carry forward), the 2024/2025 Bus Expansion Program and the 2024 Bus Replacement Program.
| Description | 23 Replacement | 24 / 25 Expansion | 24 Replacement | |||
| Units | Amount | Units | Amount | Units | Amount | |
| 40′ Bus | 14 | $ 10,965,000 | 10 | $ 8,010,000 | 15 | $ 12,015,000 |
| 60′ Bus | 1 | 1,212,800 | 2 | 2,425,600 | ||
| Ancillary Eqpmt. | – | 485,000 | 477,700 | |||
| Total Cost | 15 | $ 12,177,800 | 10 | $ 8,495,000 | 17 | $ 14,918,300 |
| Funding | ||||||
| Provincial gas tax | $ 5,263,300 | $ – | $ – | |||
| City of London | 182,000 | 2,268,200 | 10,918,300 | |||
| Federal gas tax | 6,732,500 | – | 4,000,000 | |||
| ICIP – Provincial | – | 2,828,800 | – | |||
| ICIP – Federal | – | 3,398,000 | – | |||
| Total Funding | $ 12,177,800 | $ 8,495,000 | $ 14,918,300 | |||
The Commission will be provided with regular updates on the status of the programs included in 2024 capital budget.
Recommended by:
Mike Gregor, Director of Finance
Concurred in by:
Kelly S. Paleczny, General Manager