City of Ottawa settling contractors' claims related to COVID-19 construction delays on Stage 2 LRT

Crews installing tracks on O-Train Line 2, part of LRT Stage 2, Oct. 12, 2022. (Chris Black/CTV News Ottawa)

The City of Ottawa is settling unspecified legal claims related to Stage 2 LRT construction, according to a motion brought to Tuesday's city council meeting.

City councillors were in camera for around two-and-a-half hours Tuesday. Upon returning to the public meeting, council unanimously passed a motion authorizing City Manager Wendy Stephanson to "proceed with the next steps in the process for settlement of the Claims in relation to the Stage 2 LRT projects in line with terms presented to Council during the in camera briefing."

The motion states that the details will not be reported out because they relate to litigation and are covered by solicitor-client and settlement privilege. It also calls on Stephanson and Mayor Mark Sutcliffe to seek funding support from the provincial and federal governments as part of this process.

Speaking to reporters after the council meeting, Sutcliffe said the claims are related to construction delays caused by the COVID-19 pandemic.

"Infrastructure projects all over North America have faced all kinds of claims for a variety of reasons and so we're in the process, as we always are, of resolving some of those claims," he said. "Part of what we decided is that we would go to other levels of government and ask for their help in resolving claims that are related to COVID delays and other issues that have come up."

He would not specify which part of Stage 2 was subject to claims — whether it's the east or west extension or the north-south Trillium Line, or whether it was all of them — but stressed that it was related to construction delays.

Last year, city council voted to settle a legal dispute between the City and the Rideau Transit Group over issues with Stage 1 of LRT. The City of Ottawa had launched a $131-million lawsuit against RTG in May 2021 over the numerous delays and deficiencies along the Confederation Line, while RTG countersued for $225 million. The city has been withholding nearly $70 million in payments over the ongoing dispute. Both parties refused to say publicly how much money was involved in the settlement.

Sutcliffe said the claims discussed Tuesday are not related to the unique circumstances Ottawa has faced with its light rail system.

"A large portion of the claims that we're describing are a normal part, unfortunately, of what's happened over the last four years since COVID began," he said. "What I'm talking about is that claims related to delays because of the global pandemic are common. They're not unusual. People will look at this and say it must be because of the issues we've had with Ottawa's light rail system that are unique to Ottawa. That's not what these are."

Sutcliffe said he's hopeful there will be a resolution that will not damage the City's relationship with its contractors.

The exact costs related to the claims are confidential.

According to documents prepared for the May 31 joint meeting of the Transit Commission and the Light Rail Subcommittee, the budget authority for Stage 2 LRT was $4.9 billion. As of April 30, $3.56 billion had been spent and $1.204 billion was classified as "funds reserved/committed." A total of $144,789,778 was considered unspent, including $64 million in contingency funds and $80 million in "City costs" – including planning, procurement, property acquisitions, City retained scope, and delivery oversight.

Sutcliffe said he shares people's concerns about the financial state of the transit system.

"We face some major shortfalls in the transit budget going forward for a variety of reasons," he said. "We have a working group that is looking at solutions. We're going to work very hard to find solutions. We're also going to continue to ask other levels of government for support on all of the challenges that we face with regard to funding transit."

Sutcliffe added it is "essential" that Ottawa have a sustainable transit system.

"We cannot do it alone and we need the support of other levels of government to do that and I'm going to be continuing to make that pitch to the federal government and the provincial government because we need their support to close these gaps," he said.