Calgary will take steps to prepare for the end of the Green Line project and look to transfer the financial risk of the Green Line back to the Alberta government after they sent a letter withdrawing their funding for the $6.25 billion transportation project.

The letter, sent Tuesday by Alberta Transportation Minister Devin Dreeshen, set off a chain of events Wednesday that forced a Special Meeting of Council to give city administration the green light to look at a wind-down of operations.

Calgary city council approved a revised Green Line project at the end of July, and at that time, Minister Dreeshen said that the provincial funding is secure. The project was altered after dealing with inflationary pressures exacerbated by debate over the alignment and scope of the project, along with the province requiring an additional review before re-affirming funding.

“Yesterday, we received a letter from the provincial government outlining a significant scope change to the Green Line project. As a result of that scope change, we are no longer as a city, able to afford the cost of this project,” Mayor Gondek said.

“Unfortunately, the delay that will come from this review that’s been requested, and the uncertainty in the market, will elevate costs on this project. We can no longer be the order of government that is holding the debt financing and all of the financial risk on this project. So, today, we will be having a conversation as a council on how to transfer that financial risk away from Calgarians and over to the provincial government.”

Councillors unanimously approved asking Mayor Gondek to have an urgent conversation with Premier Danielle Smith on their plans to potentially wind down the Green Line project. From there, they directed administration to start preparing information on winding down the Green Line as a city project. That will be brought forward to a Sept. 17 meeting of council.

They voted 10-5 to begin the transfer and delivery of the new transit project from the City of Calgary to the Government of Alberta.

“The truth is, I would love to retain all kinds of control over our transit projects, but we are unable to deliver them if folks don’t have alignment,” said Ward 3 Coun. Jasmine Mian.

“From a taxpayer perspective, from a value perspective, I am sad to have to see that up there, but I just don’t see any other way forward, so I will be supporting all these recommendations.

Earlier in the day, Coun. Mian was visibly upset, saying it was a hard day for all of city council and for hundreds of thousands of Calgarians. This project has been in the works for more than a decade, with tens of thousands of hours of work put into its development.

“It’s not about politics, it’s about good governance. It’s about delivering value for people, and I recognize that (the province) have some differences of opinion on the alignment, but we have given them, time and time again, the information on why we need to build through the core and that we need to serve all of Calgary, both north and south,” she said.

“So, to truncate it now and force us to build from the Event Center, which is a big part of their election platform, down to Seton, when we don’t have the approved funding for that, it’s devastating.”

Mayor Gondek said this is now not the City of Calgary’s Green Line project. A revised alignment was not what they approved back in 2020.

“This is now the province’s project, they need to be the ones to hold the risk on this, and if we cannot outline that for them, then we haven’t done our job as a good partner,” she said.

‘Not shocked’: Coun. Sonya Sharp

Ward 1 Coun. Sonya Sharp, who voted against the revised alignment back in July, said she wasn’t shocked to be in this position today.

“I look at this like I did when I voted on it. It was the most riskiest, expensive and lowest ridership leg of the project,” she told reporters outside city council chambers on Wednesday.

“What I get from the letter, though, is that they’re not against the project. They want to see a different alignment. I wanted to see a different alignment.”

Sharp said she has greater concerns that the Green Line board didn’t pick up the phone after councillors approved the new alignment to make sure that the province was OK with it. She believes the July 29 letter from Minister Dreeshen was a vote of confidence for the previously approved Green Line alignment.

“We voted the next day and we publicly published the stump of the Green Line… what the province gave the letter to was the whole Green Line. They still had to give a business case and approval for (the revised alignment),” Sharp said.

Minister Dreeshen’s July 29 letter doesn’t specifically reference the revised Green Line alignment, instead saying that the grant funding wouldn’t be reduced, provided it met certain conditions outlined in the letter. None of those conditions made mention of the desire for a business case and alignment review.

Green Line Board Chair Don Fairbairn said that the province had full knowledge of its plans to truncate the line and present that version to council. That would have been reflected in Minister Dreeshen’s July 29 letter.

“They certainly knew the options that council approved July 30. It was no surprise,” Fairbairn told councillors.

“That letter would have been written with full knowledge of the option that we were recommending to council.”

Ward 13 Coun. Dan McLean said on a project worth billions, he didn’t see an issue with slowing it down and reviewing it once again to “see if we could do this better.” He felt the board went about this the wrong way.

“My understanding is that the province and the federal government didn’t receive a full business case until August 15,” he said.

“So I think that was backwards. We should have actually got the business case to our funding partners first and then voted and decided.”

Reviewing different alignments

Minister Dreeshen’s Sept. 3 letter to Calgary city council that it would contract a third party to provide the City and Province with alternative costed proposals for the Green Line, including integration with the Red and Blue Lines along 7 Avenue – to run into a future Grand Central Station (that was included in the revised proposal). It would also examine above-ground or elevated rail in the downtown.

In a response to LWC sent Wednesday afternoon, Minister Dreeshen said that there are serious concerns with the new business case presented by the City of Calgary.

“The new alignment serves too few Calgarians, reducing ridership by 40 percent while the total project cost has risen by about 14 per cent,” Minister Dreeshen said.  

“The Green Line was initially supposed to be 46 kilometres and include 29 stations at a cost of $4.6 billion. It has now been reduced to 10 kilometres with 7 stations at a cost of $6.2 billion. In short, with this plan Calgarians are getting less for much more.”

Minister Dreeshen said they would be taking a more active role in aligning the Green Line, including exploring other options.

“We look forward to seeing a new alignment from the independent third party, separate from the City of Calgary, before determining the next steps,” Dreeshen said.  

“Throwing good money after bad is simply not an option for our Government.”

When asked about those options by Ward 12 Coun. Evan Spencer, and whether they had been presented in the past, Infrastructure Service GM Michael Thompson said a review of multiple options was presented in full during a meeting in 2020. (DOCUMENT PROVIDED BELOW).

“At the end of that work with the province, this alignment still stood as the best value and the best outcome,” Thompson said.

“So, the narrative in the public that the decision point we arrived at in July didn’t allow for the time to look at some of these alternative alignments is false?” Coun. Spencer queried.

Thompson said work done in 2020 reviewed the alternative alignments, taking into account the impact on cost, ridership, and long-term development.

Additional cancellation costs could pile up

The project spend to date, with the Beltline utility work, the enabling works for the southeast, LRV purchases, the design updates and the work to secure and then work with a delivery partner for the project is $1.286 billion. Committed cost thus far is around $1.5 billion.

Mayor Gondek said that there would likely be a cost impact if they wind up the Green Line work and shelve the project. That’s what they hope to find out with the administration direction.

“We’ve done a lot, and we have agreements with members of the private sector to deliver a Green Line. So yes, there are absolutely implications, and I’m quite concerned that we will shake market confidence,” she said, adding that the uncertainty could impact bidding on other city projects.

Green Line CEO Darshpreet Bhatti confirmed that there would be a variety of obligations that would have to be considered and they are currently reviewing all of their service agreement with contractors and other vendors. He did say that the province was to some degree made aware of the impact of their decision to withdraw the funding.

“I think it’s fair to say they were informed that there would be some significant implications,” said Bhatti.

Later, Ward 10 Coun. Andre Chabot asked if he believed there could be a middle-ground with the province.

“I’ll speak for myself, and also, I think it’s fair to say, on behalf of the board, our level of confidence is very low,” Chair Fairbairn said.

“We don’t believe that we can recover from this.”