Metrolinx splits unfinished Hazel McCallion LRT work into 2 contracts

Provincial transit agency Metrolinx has split a mega contract for its delayed Hurontario Street light rail project into two parts, a move it says “resolves all commercial disputes” on the line.

Construction on the Hazel McCallion LRT in Mississauga has been underway since 2020, but it has been beset by delays and legal battles as a private consortium tries to finish the work.

The 18-kilometre route was originally slated to be done in 2024, but is now tracking to be finished in 2028. The opening date will follow once testing and commissioning are complete.

As part of its regular project updates, Metrolinx disclosed that the $4.6-billion contract signed with the consortium Mobilinx in 2019 had been rewritten and split into two parts.

The project was previously governed by one massive P3 contract for Mobilinx to design, build, operate and maintain the line.

Theoretically, P3 contracts mean the private sector signs up to build infrastructure at a certain price, but for Ontario transit projects, they have been marked by stoppages and messy legal disputes over who is responsible for delays.

The two new agreements — which are both with the same consortium — will be an alliance agreement to build the route and the existing P3 terms to maintain and operate the line, the government said.

Alliance deals allow more options for governments to release payments to the private sector companies and are seen to offer more flexibility. Both Metrolinx and the Ford government have indicated they see alliance contracts as better than P3 in most circumstances.

“In this contract model, the project owner (Metrolinx) partners directly with private sector companies to form an ‘Alliance’ rather than administering a third-party consortium,” Metrolinx wrote in a statement sent to Global News.

“All project participants share responsibility for project costs, outcomes, risks, and rewards. Instead of operating as separate entities with individual commercial interests, the alliance structure aligns incentives around achieving the best overall results for the project. ”

The new agreement also means contractors have decided to set aside legal disputes they had been pursuing over the delayed project, the government said.

Two years ago, Mobilinx faced legal challenges in both Toronto and Brampton over the alleged failure to return equipment, pay rental fees and square up a $2.7-million bill with another subcontractor.

It also had its credit rating downgraded over delays.

Metrolinx says it has spent $3.5 billion of the project’s estimated $5.5 billion cost so far, according to its most recent board meeting. That figure, the documents say, doesn’t include operating costs.

The cost of the project was listed at just over $6 billion last year, when operating was included, substantially more than the original $4.6 billion price.

The government said the new contracts would not increase the price of the project.