TAMRMS#: B06
10.2
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St. Albert Transit Bus Funding Increase
Presented by: Tim Saunders, Director, Public Operations
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RECOMMENDED MOTION(S)
recommendation
1. That the budget for Municipal Growth Capital Charter TRAN-004 Transit Growth Buses (Project 424351) be increased by $213,500 for a total budget of $1,833,500 to be funded from Capital Reserve.
2. That the budget for Municipal Repair Maintain Replace (RMR) Capital Charter TRAN-001 Transit Bus Lifecycle Replacement for 2025 be increased by $1,265,250 for a total budget of $10,515,950 to be funded from the Transit Lifecycle Reserve with goods and/or services not to be received until after January 1, 2025.
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PURPOSE OF REPORT
To request an increase in funding for budgets within two approved Capital Charters, Municipal Growth Capital Charter TRAN-004 (2024) and Municipal Repair Maintain Replace (RMR) Capital Charter TRAN-001 (2025), in order to continue with procurement of ten buses in 2024 and 2025 that are part of current growth and lifecycle replacement plans.
BACKGROUND AND DISCUSSION
Municipal Growth Capital Charter TRAN-004 Transit Growth Buses was approved in the amount of $1,620,000 for 2024 procurement of two new buses to support City growth and provide transit service in the neighborhoods of Jensen Lakes and Riverside. This was carried by Council on August 29, 2023, via AR-23-416.
Municipal Repair Maintain Replace (RMR) Capital Charter TRAN-001 Transit Bus Lifecycle Replacement was approved in the amount of $9,250,700 in 2025 and $8,267,000 in 2026 for the lifecycle replacement of 17 buses, eight and nine in each year, respectively. This was carried by Council on August 29, 2023 via AR-23-417.
The funding provided is intended to procure a total of 19 buses, two for growth and purchase in 2024, eight for lifecycle replacement in 2025, and nine for lifecycle replacement in 2026. The multi-year approval permits procurement of long delivery items for the year that they are budgeted and seeks to gain efficiencies through ordering larger quantities of the assets.
The procurement activities began in December of 2023. In consideration of pricing volatility and to balance risk allocation of cost inflations, firm pricing was requested for budget years 2024 and 2025 only. This was intended to prevent inflated risk pricing for the 2026 buses. These buses would not be immediately entering the suppliers’ production and would not have “locked-in” pricing that may be subject to escalation between City procurement and supplier commencing production. The procurement documents do however allow for the option of negotiation in 2025 with the successful supplier for the 2026 buses. As such, the current purchase request contemplates the purchase of two 40’ buses for growth in 2024, three 40’ buses for lifecycle replacement in 2025, and five 60’ buses for lifecycle replacement in 2025. If the City elects to proceed with this purchase, there is not a commitment to purchase buses from this supplier in 2026.
The pricing received through the procurement process is higher than the values estimated and brought forward in the charters that were approved for funding. The prices received are approximately 15% higher depending on the bus configuration and is due to market conditions such as supply chain disruption, extended procurement timelines, and rapid unexpected commodity pricing inflation.
Administration has worked through these considerations to assemble a purchase timeline that reduces future cost escalation risk from entering fixed pricing, while maintaining a level of efficiency in production of buses for 2024 and 2025. This enables procurement of buses for 2026 closer to production periods, providing greater cost certainty.
By going forward with this purchase, procurement of the two buses required to support growth can proceed and production will also commence on the buses required for lifecycle replacement in 2025.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
N/A
IMPACTS OF RECOMMENDATION(S)
Financial:
The budget for TRAN-004 Transit Growth Buses (Project 424351)) be increased by $213,500. Initial funding would be from the Capital Reserve, but Administration would look for grant opportunities. There are sufficient funds in the capital reserve to cover the increase.
The budget for TRAN-001 for 2025 be increased by $1,265,250. This project is funded from the Transit Lifecycle Reserve, but Administration would look for grant opportunities. As approval is for 2025 the buses will not be received until after January 1, 2025.
Compliance & Legal:
Given the nature of this procurement, the purchase requires a commitment to the purchase of the 2024 and 2025 buses to the supplier, at the fixed pricing submitted. A revision of quantity requested for 2024 or 2025 would require further negotiation with all submitters and would be subject to potential price increases due to loss of economies of scale if the quantities were reduced.
Program or Service:
Failing to proceed with the purchase of the two growth buses has an impact on City Council Policy C-TS-01, Transit Services in that implementation of service to Riverside and Jensen Lakes will be delayed.
Lifecycle of these units is 18 years. Approval would help procure the buses in a manner that would decrease extensions past the 18 years thus reducing down-time, schedule risk and operational costs. Postponement of purchasing the buses designated for lifecycle replacement may potentially impact current transit service levels due to increased unavailability of buses, due to maintenance requirements.
Organizational:
None at this time.
Risks
The recommendations position the City for sustaining currently identified Transit service levels.
Postponing transit service to the communities of Riverside and Jensen Lakes contravenes City Council Policy C-TS-01 (Transit Services) that aims for a standard of transit within 400m for 80% of all residents in St. Albert and identifies a threshold population of 500 residents for the introduction of peak-period service (300 for medium to high density). Further postponement can also reduce opportunities for access to employment, education, and recreation, and promote the use of the single occupant automobile. Also, transit ridership and acceptance of transit as a viable alternative to the automobile is potentially more successful if service is introduced to a neighborhood at earlier stages of development before the entrenchment of automobile habits.
If transit buses, component parts or support equipment are not replaced in a timely manner, unscheduled breakdowns and additional maintenance costs are expected. Cancellation of transit service would be the ultimate result of not following the replacement schedule.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
None at this time.
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
E.1 - Public Transit
E.1.1 Conventional Fixed Route Transit Services - Provision of convenient, affordable, and effective public transit services within St. Albert and to major destination areas in Edmonton, including Downtown, the University of Alberta, NAIT/Royal Alexandra Hospital, and West Edmonton Mall.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
On August 29, 2023, Council passed the following motions:
AR-23-416
That the 2024 Municipal Capital Growth Charter for Tran 004 - Transit Growth Buses be approved in the amount of $1,620,000 with funding from the Capital Reserve.
AR-23-417
That the Municipal Repair Maintain Replace (RMR) Capital Charter Tran-001 Transit Bus Lifecycle Replacement be approved for $9,250,700 in 2025 and $8,267,000 for 2026 to be funded from the Transit Lifecycle Reserve with goods and/or services not to be received until after January 1 of 2025 and 2026 respectively.
IMPACTS OF ALTERNATIVES CONSIDERED
Alternative 1 - Do Nothing. Do not increase funding to Municipal Growth Capital Charter TRAN-004 Transit Growth Buses and Municipal Repair Maintain Replace (RMR) Capital Charter TRAN-001 Transit Bus Lifecycle Replacement. No purchase would be made.
Financial - N/A
Compliance and Legal - The procurement will be cancelled.
Programs or Service - Transit service to the neighborhoods of Jensen Lakes and Riverside would not be implemented without the bus acquisition for growth. Transit service levels would not be sustainable by delaying the lifecycle replacement due to increased maintenance activities with the existing fleet.
Organizational - N/A
Risks - Risk of reduced transit service levels and non-compliance with Transit policies.
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Report Date: May 7, 2024
Author(s): Tim Saunders
Department: Public Operations
Department Director: Tim Saunders
Managing Director: Diane Enger
Chief Administrative Officer: Bill Fletcher