January 18, 2001
Le 18 janvier 2001
Submitted by/Soumis par: Rosemarie T. Leclair General Manager/Directrice
général,
Transportation, Utilities and Public Works/Transport, services et travaux
publics
Prepared by/Préparé par: Gordon Diamond, Director, Transit
Services/Services de transport en commun
842-3636 extension 2271
gordon.diamond@city.ottawa.on.ca
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Ward/Quartier: All |
Ref N°: ACS2001-TUP-TRN-0001
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SUBJECT/OBJET: |
APPROVAL TO PURCHASE LOW-FLOOR BUSES, YEAR
2001
APPROBATION DE L’ACHAT D’AUTOBUS À PLANCHER SURBAISSÉ EN 2001
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Le but du présent
rapport consiste à obtenir l’approbation du Conseil municipal pour l’achat de
48 autobus conformément à une lettre d’intention adressée à New Flyer
Industries et approuvée au préalable par le Conseil régional. Cette acquisition
répond aux exigences de 2001 relativement à une entente pluriannuelle visant à
accroître le nombre de véhicules du parc de transport en commun ou à remplacer
ces derniers, et ce conformément au plan d’immobilisations sur dix ans d’OC
Transpo.
REPORT
RECOMMENDATION(S)
That
City Council approve the purchase of thirty low-floor articulated and eighteen
standard low-floor buses from New Flyer Industries for a price not to exceed
$27,000,000 including applicable taxes, for delivery in 2001.
OC Transpo's Ten Year
Capital Plan calls for an increase in the fleet size to accommodate increased
ridership and also for the replacement of older vehicles, including the
replacement of Orion Ikarus articulated buses in a staged process.
In October 1998, the Transit
Services Committee approved a multi-year agreement with New Flyer Industries,
the only North American supplier of low-floor articulated buses, for the supply
of 115 low-floor articulated buses based on the year 2000 price and defined
escalation provisions. In May of 1999,
the Transit Commission approved a contract for the purchase of the first 37
low-floor articulated buses from New Flyer Industries as part of this
agreement. These vehicles will be arriving in the next month or so, some 20
months following the initial placement of the order.
As part of the development
of its 2000 budget, OC Transpo identified the need to commit to the purchase of
30 articulated low floor buses and 18 low floor standard buses to meet the 2001
replacement and growth requirements. The level of funds in the Transit reserve
fund at that time meant that the purchase could not proceed without putting
additional pressure on the capital program. As an alternative, Regional Council
approved the issuance of a Letter of Intent to New Flyer which would secure OC
Transpo’s vehicles for delivery while deferring the actual expenditure to 2001,
subject to approval of the new City Council.
A condition included in the letter is that a firm order must be received
by New Flyer Industries by January 31, 2001.
The financial comment section confirms that funding is available from
the designated reserve funds to proceed with the purchases of these vehicles.
DISCUSSION
The operational need for the
2001 order of 48 new buses is urgent.
OC Transpo's ridership has increased by 15% over the last two years
while the increase in scheduled buses has been only 9%. A three percent
ridership increase is budgeted in 2001 and it is planned to absorb some of this
by increasing the proportion of articulated buses in the fleet. The plan calls
for an increase in the overall fleet
size from 880 to 893 next year, and an increase of articulated buses in the
fleet from 115 to 145.
From a fleet maintenance
perspective, the need to proceed with the planned replacements is even more
significant. Although the fleet age has
reduced slightly with the arrival of 140 new standard buses in 1998 and 1999,
there are still 170 buses over 18 years of age and 32 over 25 years in the
standard bus fleet. The industry
standard for useful life for a standard bus is 18 years.
In addition many of the
Orion Ikarus articulated buses have outlived their useful life. The Orion Ikarus articulated buses were
imported from Hungary and have a history of high maintenance costs and
premature rusting. Much of the work done in the Comprehensive Review of OC Transpo
focussed on the fleet and concluded that a reasonable life span for the
articulated buses would be 12 years. Today there are 115 articulated buses in
the fleet with ages ranging from 13 to 16 years. The 37 articulated buses, that
will be arriving next month, plus the 30 articulated buses that are the subject
of this report, will allow 37 old articulated buses to be retired in 2001 and
the overall number of articulated buses in the fleet to be increased by 30. The
buses to be retired were last refurbished 3 to 6 years ago and continuing them
in service is not an option without additional major refurbishments at a cost of
in excess of $100,000 each. This would only extend the life of these buses for
two or three years, given their extensive body corrosion.
New Flyer
Industries is the only low-floor articulated bus manufacturer in North America
and their new low-floor standard buses are the only ones which, with 44 seats,
approach the seating capacity of high-floor buses. The prices agreed for the thirty articulated buses are based on
the multi-year agreement and those for the eighteen standard buses were
negotiated based on the price of the same model of buses recently supplied to
London, Ontario.
Failure to obtain these 48 buses by mid-2001 would
have significant implications for service reliability and operating costs. The passenger capacity provided by an
articulated bus is approximately fifty percent higher than that of a standard
bus. Should the 30 articulated buses
not be available, it will be necessary to maintain 45 standard buses in service
which are overdue for retirement. The annual costs of operating the additional
15 buses would be in the order of $1.5 million.
The 18 standard buses in the 2001 order are planned
to replace standard buses in the fleet on a one for one basis. Failure to
receive these would mean that 18 very old buses would need to remain in
service. It would also be necessary to
provide five additional spares to cover breakdowns at an annual operating cost
of $0.5 million.
In total 68 to 70 buses that are scheduled for retirement this year would still be required for service and additional operating costs of close to $2 million would be incurred
FINANCIAL IMPLICATIONS
The total cost of these 48 buses is expected to be approximately $27
million. Pre-approval of the 2001
capital budget for these vehicles is being requested due to the requirement in
the letter of intent between OC Transpo and New Flyer Industries (NFI) that a
firm order be received by NFI before January 31, 2001. It is unlikely that Council approval of the
2001 Budget will be completed by that date.
In December 1996, Regional Council approved the
purchase and financing 45 articulated low floor buses. Thirty-seven of the 45
articulated buses were ordered for delivery in 2000 and, following delays in
production, will be delivered in the next few weeks. The remaining eight buses
are included in this report which requests approval to purchase a total of 30
low floor articulated buses.
Since the expenditure authority and funding of these
eight buses has already been approved, no additional funds need to be
identified. Based on an articulated bus
unit price of $642,000, the additional financing requirement for the remaining
22 articulated and the 18 standard low floor buses is reduced from $27 million to
approximately $21.9 million. The 2001
capital forecast in the Region’s 2000 capital budget identified an envelope of
$21.6 million for the purchase of standard and articulated buses. The $0.3
million difference is not significant.
As stated in the report, the purchase of these units
is required to address the need to replace an ageing fleet and to increase the
fleet size to meet increased ridership demands. In the RMOC’s development charge policy, as adopted by Regional
Council in 1999, approximately 21% of the cost for new buses have been
identified as being attributable to development growth. Therefore, 21% of the $21.9 million purchase
cost ($4.6 million) can be funded from development charge revenues. It is projected that the 2000 year end balance
in the RMOC Bus Service Development Charge Reserve Fund will be approximately
$7 million.
The following table summarizes the above discussion.
Requirements Identified in Report |
#Units |
$Millions |
|
Standard Buses |
18 |
|
|
Articulated Buses |
30 |
|
|
|
48 |
27.0 |
Previously Approved Buses |
|
|
|
8 Articulated |
(8) |
(5.1) |
|
|
|
|
Attributable to Growth |
|
|
|
21% of cost from Development Charge revenues |
|
(4.6) |
|
|
|
|
|
Remaining Balance to be Financed |
40 |
17.3 |
The 2001 draft operating estimates as adopted by the
Ottawa Transition Board, includes a pay-as-you-go contribution of $28.6 million
to the reserve fund for OC Transpo fleet replacement purposes. It is
recommended that $17.3 million of this contribution be pre-committed to fund
the remaining balance.