Strong oversight needed to avoid 'blank cheque' approach to new ferries, councillors say as cost balloons

Toronto needs to move at full steam to replace its aging ferry fleet, but some councillors are expressing concern that the cost of the ferries has been growing quickly and could continue to balloon.

While the costs of replacing two of the four aging ferries was budgeted at $25 million back in 2020, the current estimate now stands at over $92 million, city staff said last week.

It should be noted that city council has twice changed its mind about what type of ferries to purchase – first switching from diesel to hybrid, and then switching from hybrid to costlier fully electric vessels – in order to help meet its emissions reductions targets.

However in the past few months alone, the estimate has grown by $3 million from the $89 million budgeted back in February.

"It feels like we have that blank check approach to this journey," Coun. Lily Cheng told CP24.com in an interview.

When it comes to lifecycle costs for the ferries in particular, Cheng says "there just hasn't been enough clarity."

At a recent meeting of the General Government Committee, councillors peppered staff with questions about the long-term operation of the new electric ferries and what it will cost.

Coun. Stephen Holyday moved a motion for staff to report back on lifecycle and maintenance costs, while Coun. Paula Fletcher had many questions about maintenance staff, training and other long-term costs.

"We've seen the price escalate significantly, and I mean by tens of millions of dollars over the last few years," Holyday told CP24.com. "And we've also seen a decision to go to full electric and I've heard comments about there being a strong business case to do it, but I haven't seen the homework."

The Toronto islands ferries currently carry approximately 1.4 million passengers annually.

Holyday and many other councillors agree that the city needs the new ferries to make it easier to get back and forth the between the Toronto islands and the mainland. But some are also expressing doubt about whether the project will stay on budget and on schedule.

"We want to be net zero, but when we say yes to a journey, we should actually have a clear idea of what it's going to cost us," Cheng said. "So it's worrisome to me we're here now where we're embarking on this electrification without that final number."

Replacement project has been ongoing for almost a decade

Facing long lineups for boarding and increasing mechanical problems, the city has been mulling the purchase of new ferries since 2015 to replace its aging fleet.

The vessels currently in use by the city are between 61 and 114 years old years old.

A 2018 analysis by KPMG said that while full electrification of the vessels would be ideal from an emissions standpoint, there would be "significant capital infrastructure costs and challenges" that would make the option infeasible.

Council first planned to buy two new diesel ferries, then switched to diesel-electric hybrids in 2019 on the advice of the KPMG analysis.

Following further analysis, council voted to switch from hybrid to fully electric ferries in 2022 – despite the KPMG report saying it would be too costly – in order to help meet the city's emissions goals.

That same year, one of the existing ferries crashed into the dock, injuring 12 people and highlighting the need for a modern fleet.

It's estimated that switching to fully electric vessels will save around $1 million per year on fuel and operational costs and staff say the costs of full electrification are expected to be recouped over 20 years.

But that equation could look different if the long-term costs of the electric ferries are higher.

Project gets stronger oversight

While the procurement lies with Parks, Forestry and Recreation, other city departments and senior managers have recently taken a stronger hand in overseeing the bid.

"I think that's a fair comment," Coun. Paula Fletcher told CP24.com when asked whether there was a sense that greater supervision was needed on the ferry procurement.

"I think that the city manager and city legal have moved to give much greater oversight over this whole RFP (Request for Proposals) – the purchase, the building of the ferries, ensuring everything is going to be great – because we don't usually have things built for us," she said. "We buy things, and this is a new process, so it deserves very close oversight."

She points out the city doesn't typically have vehicles like garbage trucks built to purpose and with other major procurements like streetcars and subway trains, there's a greater familiarity with the manufacturers.

She acknowledged that the parks department would not typically be in charge of procuring large ships.

"So this is just a unique circumstance where this is coming from the parks department, and my long-term plan would be that any such venture in the future would be better aligned with corporate services or those who do this as their core business," Fletcher said. "Building ferries and buying ferries is not the core business of the parks department, so we'll keep an extremely close eye on this one."

The first vessel is now expected to arrive in Toronto Harbour by December 2026 and go into operation several weeks later. The second is expected to arrive in the second quarter of 2027.

City staff say that much work needs to be done within the next two years to make that happen – including modifications to the Jack Layton Ferry Terminal and sending staff to Romania to receive training for the new vessels – and it's essential to stay on schedule to meet those targets.

Worries about procurement do not extend only to the ferries. Of late, Toronto has a poor record of letting critical infrastructure stay in service long past its due date. One of the ferries crashed into the dock in August 2022, injuring 12 people and highlighting the urgent need for replacements for the fleet.

Just a year later, the Scarborough RT literally went off the rails after its life was extended long past its expiry date. And the TTC is now warning that the Line 2 subway cars are getting close to urgent need for replacement and an order has not yet been placed for new ones.

While questions do remain about the long-term cost for the ferries – think charging stations, replacement batteries, specialized maintenance staff – councillors agree that the city needs to move forward with the overdue purchase and say it will likely pass at council.

"I don't know that anyone will want to do an undo button to the commitment to buying electric ferries," Cheng said.

Still, they say it's important to move forward "with eyes so wide open" on the details of the project.

"Believe me, I'm going to be checking everything," Fletcher said, but added that "we desperately need those ferries."

A staff report to city council later this month is expected to fill in some of the blanks around long-term costs of the ferries when council considers the purchase.

Ferries expected to improve ease of access to islands, reduce emissions

The new ferries are expected to greatly increase capacity. A new passenger and vehicle vessel to replace the Ongiara will increase capacity from 220 people and 10 vehicles to 650 people and 14 vehicles. The new passenger-only vessel to replace the William Inglis will increase capacity from just 309 people to 1,300.

It's estimated that the increased ferry capacity will increase visitor numbers to the island, but the city is still crunching the numbers to determine an estimate for how much.

The new ferries will need to recharge every four trips, but will be able to do so in just six minutes.

City staff say that using the fully electric vessels will be the emissions equivalent of taking 600 cars off the road each year.

The ferry purchase is moving forward as one other councillor calls for more options for getting to the islands, including exploring a possible bridge link for pedestrians and cyclists.